Published: Tue, January 16, 2018
Markets | By Terence Owen

British construction company Carillion started bankruptcy procedure

British construction company Carillion started bankruptcy procedure

In October a year ago the joint venture was awarded a £200 million contract with Gigaclear to roll out 1Gb/s broadband to the South West England (see Gigaclear signs Carillion telent to build FTTP in SW England), and last February it reached a £1.5 billion agreement with Openreach to extend its national fibre broadband network.

The government is holding high level talks with Carillion bosses to discuss a long-term rescue package for the construction giant as it teeters on the brink of collapse.

Thousands of jobs also hang in the balance as the company employs about 20,000 people in the Uk and 43,000 people overseas.

Lidington said the taxpayer could not be expected to bail out a private sector company, "particularly when their troubles arose for the most part from a side of the business that is nothing to so with United Kingdom government contracts".

Cabinet minister David Lidington said the government would be providing the necessary funding required to maintain public services.

A DHSC spokesperson said: 'The hospital regulator NHS Improvement has been helping trusts with planning and will continue to work intensively with trusts over the coming days.

"Labour urges the government to stand ready to intervene and bring these crucial public sector contracts back in-house".

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The Official Receiver has been appointed by the court as liquidator along with partners at PwC that have been appointed Special Managers.

The government had been monitoring Carillion closely after the first profit warning and in most cases awarded joint venture contracts so the other company could take over the work if there were problems, said a spokesman for Prime Minister May.

He said: "This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years".

Network Rail is activating contingency plans following the news that one of its main framework contractors, Carillion, is to enter liquidation.

The company are the second biggest construction firm in Britain, so on top of the potential job losses, the collapse will also represent huge losses to shareholders.

"In the meantime - as emergency meetings take place between officials - employees of Carillion, pension-holders and taxpayers will want assurances that financial protections are in place in the event the supplier experiencing further financial difficulties". Sky News says the debts could reach as high as £2bn, and puts the pension fund deficit at £900m, leading to questions about possible corporate mismanagement.

Rehana Azam, national officer of the GMB union, said: "What's happening with Carillion yet again shows the perils of allowing privatisation to run rampant in our schools, our hospitals and our prisons". They will head into work today not knowing if their wages, pensions and even their jobs are safe.

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