Carillion in Liquidation

[Elecman]

I thought that the government through HS2 had the contracts worded in such a way that the othervJV partners agreed to carry on minus Carillion if it went bust so HS2 is safe

 

[Domh245]

I thought that the government through HS2 had the contracts worded in such a way that the othervJV partners agreed to carry on minus Carillion if it went bust so HS2 is safe

That's certainly the view of David Lidington

Speaking on Radio 4's Today, Aylesbury MP David Lidington said: "This is a private sector company, it's regrettable it hasn't been able to find a suitable refinancing option with its lenders. We did decide that taxpayers cant be expected to bail out a private sector company especially when their troubles, for the most part, arose from a side of their business that's nothing to do with UK government contracts.

"Ever since the profit warnings were announced during the course of last year, the various government departments that have had business with Carillion have been drawing up contingency plans about how they might respond.

"In the event that there was a crisis like that which we are seeing, we hoped they would be successful with their bankers and their other creditors in the way they assured us they were confident they would be. The contracts that were awarded by some government agencies and departments after July last year, you will see those are joint venture arrangements.

"Projects like HS2 have other joint venture partners where the contract was written in such a way that those other partners have to come in and they have to take up responsibilities."

 

[73001]

I thought that the government through HS2 had the contracts worded in such a way that the othervJV partners agreed to carry on minus Carillion if it went bust so HS2 is safe

Yes, one of my friends worked at Carillion head office until a few weeks ago. The other two partners were aware of potential issues and had already said they would guarantee the continuation of the HS2 stuff.

 

[ainsworth74]

This is not another opportunity to discuss whether or not HS2 is a good/bad idea, whether or not it should/shouldn't be scrapped, whether it is/isn't a vanity project, etc, etc. There are plenty of other threads available where such things can be discussed to great length and in great detail. This thread is about the collapse of Carillion. Any further posts regarding the rights/wrongs of HS2 will be deleted as off-topic.

Thank you,
ainsworth74

 

[theageofthetra]

Lightning does strike twice:

BHS....Philip Green was chairman
Carillion....Philip Green, chairman.

Coincidence of names or what!

Yeah I thought that- different people of course.

 

[theageofthetra]

No multiple locations are quoting liquidation.

Compulsory liquidation too. As bad as it gets.

 

[theageofthetra]

Now being reported by BBC & ITV. The political mudslinging has already begun with some labour person on BBC putting the boot in.

With a Labour peer being a director?

 

[theageofthetra]

Upto £900million in debt

So who made the decision to pay out a dividend then?

 

[Dai Corner]

With a Labour peer being a director?

Baroness Morgan is on the audit and renumeration committees. So she should have been very aware of the financial situation and helped decide how much her fellow Directors were paid.

 

[theageofthetra]

In land of my fathers where Abeilio were using Carillion as their construction partner for their bid for the South Wales Metro -

" I asked the WG to explain whether and how Abellio can remain in the franchise contest, but they said they don’t comment on procurement processes"

One suspects theirs a lot of flapping about at Transport for Wales given Abeilio were in many peoples eyes "favorite" given their bid teams links with Welsh Labour.

Nothing to do with a Labour peer being a director?

 

[theageofthetra]

Baroness Morgan is on the audit and renumeration committees. So she should have been very aware of the financial situation and helped decide how much her fellow Directors were paid.

She could have warned Labour run Leeds city council who awarded them a £14m contract last week.

 

[Xenophon PCDGS]

You could probably find all that online Paul.

Seeing that some people on the website apparently have deep inside knowledge of the Carillion organisation, I thought it would be fair to ask the question that I did upon this thread, as they could give a reply with personal insight.

 

[CheshireCrusty]

According to their 2016 accounts Rail accounted for under 8% of the total business. I am not sure however whether some of the rail activities mentioned earlier in the thread would not be classified under different categories e.g. facilities management (the largest proportion of their activities) and construction (although a significant part of that was in Canada and the Middle East). It is this last part of the business that appears to have created the problems

 

[CheshireCrusty]

In their 2016 Report (dated March 2017) the Board of Carillion identified the four greatest risks facing the company as:

1. Winning new business
2. Contract management
3. Pensions Liabilities
4. BREXIT

These were the only high risks with high impact identified

 

[Rob T]

Sorting this mess out will be very complicated and will have severe political implications.

An example - if you are a supplier to Carillion and are already owed significant sums for previous work. Do you continue to supply, or stop and stem your possible losses? A big decision.

If you stop then this would have an effect immediately on Carillion directly contracted services (such as to hospitals, schools etc). Even filling your van up with diesel on the Carillion account today will not be straightforward (or even possible).

I think this story has a long way to run.

 

[LNW-GW Joint]

Rail doesn't seem to appear as a standalone business within Carillion.
It makes it very difficult to see what is going on, and if it is profitable.
On top of that is Network Rail's cut back of projects, which in itself must have reduced the pipeline of new work for Carillion and other contractors.
Then much of the current work is in joint ventures.
The best news would be if their JV partners took on Carillion's share, but they would only do that if it was profitable.

 

[Clip]

Seeing that some people on the website apparently have deep inside knowledge of the Carillion organisation, I thought it would be fair to ask the question that I did upon this thread, as they could give a reply with personal insight.

And I will be guessing that most of their knowledge is imparted from finding it on the internet given I've never seen anyone declare they work for Carillion before now on this forum.

 

[CheshireCrusty]

if you are a supplier to Carillion and are already owed significant sums for previous work. Do you continue to supply, or stop and stem your possible losses?

As this is a liquidation, as a supplier you will not receive any of the money you are owed (for some considerable time at least). The liquidation creditors' dividend payment will only be a proportion of the debt owing to you and probably only a small proportion at that as employees wages up to today, taxes outstanding such as VAT, PAYE and NI, and bank loans are all paid first.
You cannot make any further supplies to the company in liquidation (whether this is all Carillion companies is currently unclear).
You are correct this is a real mess and explains why all construction sites on which Carrillion is a contractor now appear to be at a standstill (for days, weeks or months?).

 

[strawbrick]

It doesn't really matter *that* much.

All they do is assemble and orchestrate a group of sub-contractors. The knowledge based contractors won't drop dead if Carillion goes bust, the grunt sub-contractors may experience some debt-management issues, but they will still be around one way or another.

It's a sad fact of modern business. Often when you start digging around, they are nothing more substantial than a Bitcoin.

"the grunt sub-contractors may experience some debt-management issues" - typically the "grunt" contractors issue invoices at 30 day intervals, on 60 day terms. Thus work to the end of say September is paid at the end of November, work in October paid at the end of January and work in November at the end of December. If the main contractor goes bust in December before paying for September the "grunt" can see three months money vanish. That 25% of the annual turn-over lost. To understand the potential effect, try not drawing your wages for the next three months and then tell us how you got on " experience some debt-management issues"!

 

[DarloRich]

It doesn't really matter *that* much.

All they do is assemble and orchestrate a group of sub-contractors. The knowledge based contractors won't drop dead if Carillion goes bust, the grunt sub-contractors may experience some debt-management issues, but they will still be around one way or another.

It's a sad fact of modern business. Often when you start digging around, they are nothing more substantial than a Bitcoin.

Your "some debt management issues" often equate to sub contractor goes bye bye in the real world.

 

[Bletchleyite]

"the grunt sub-contractors may experience some debt-management issues" - typically the "grunt" contractors issue invoices at 30 day intervals, on 60 day terms. Thus work to the end of say September is paid at the end of November, work in October paid at the end of January and work in November at the end of December. If the main contractor goes bust in December before paying for September the "grunt" can see three months money vanish. That 25% of the annual turn-over lost. To understand the potential effect, try not drawing your wages for the next three months and then tell us how you got on " experience some debt-management issues"!

This really does irritate, is seriously disadvantageous to small business, and I'd love to see some regulation to prevent it.

 

[BestWestern]

The BBC quotes David Lidington as saying that public sector contract staff should continue to attend work, and will be paid. So that at least takes care of what most would agree is the most important stuff. This presumably also explains the story that one county had the fire service about to deliver school meals, but didn't in the end require them to. Desperate measures indeed.

 

[jamesontheroad]

In my (one of my) day jobs I regularly visit one of Her Majesty's prisons. The Carillion employees there (who run pretty much all the facilities, maintenance, catering, stores, etc seemed pretty laid back about it. In the words of one of them, "we knew it was coming for months."

 

[Dai Corner]

The BBC quotes David Lidington as saying that public sector contract staff should continue to attend work, and will be paid. So that at least takes care of what most would agree is the most important stuff. This presumably also explains the story that one county had the fire service about to deliver school meals, but didn't in the end require them to. Desperate measures indeed.

It's one thing guaranteeing the pay of staff on public sector contracts, but they also need equipment and supplies. For example, I have read that their fuel cards are no longer accepted.

 

[LNW-GW Joint]

An interesting question is whether Network Rail counts at "public sector" in the Lidington sense.
I suspect not. I guess it will depend on how/when the contracts were let.
I can't see any comments on the situation on the NR or DfT web sites.

 

[ainsworth74]

I've been wondering about the various service contracts that Carillion deliver for TOCs. For example does anyone know if Northern's Customer Experience Centre is open today?

 

[DarloRich]

It's one thing guaranteeing the pay of staff on public sector contracts, but they also need equipment and supplies. For example, I have read that their fuel cards are no longer accepted.

of course. There is nothing to back them up. That is standard procedure.

 

[Domh245]

I can't see any comments on the situation on the NR or DfT web sites.

From Tony Miles (of Modern Railways Magazine), at least in the context of Manchester - Preston electrification

Please find a statement re: Carillion.

Network Rail’s Manchester-Preston railway upgrade, a key part of the Great North Rail Project, is continuing despite today’s news on its principal contractor Carillion.
Martin Frobisher, managing director for Network Rail’s London North Western route, said: “While the full impacts of Carillion going into administration will become clear in the coming weeks, Network Rail has committed to work closely with the official receiver as we continue our work to upgrade the Manchester-Bolton-Preston line.”

Re: work on the route: “Shifts to be worked this week by Carillion staff will temporarily be suspended while new arrangements are made.”
Re: any other Carillion projects, Manchester to Stalybridge. Again, we will know more in the coming weeks.
Re: completion dates, too early to say but obviously we will work with the receiver to continue the work.

 

[JohnB57]

As this is a liquidation, as a supplier you will not receive any of the money you are owed (for some considerable time at least). The liquidation creditors' dividend payment will only be a proportion of the debt owing to you and probably only a small proportion at that as employees wages up to today, taxes outstanding such as VAT, PAYE and NI, and bank loans are all paid first.

Unless I'm mistaken and this case is different, HMRC haven't had preferential creditor status for some years and have to take distribution alongside normal unsecured creditors.

 

[185143]

I've been wondering about the various service contracts that Carillion deliver for TOCs. For example does anyone know if Northern's Customer Experience Centre is open today?

I wasn't willing to waste an excessive amount of my time on hold-however you do get through to the switchboard at least, with no suggestion of anything being untoward...