It is estimated that as many as 30,000 small businesses could be owed money by Carillion, which went tinto compulsory liquidation on Monday. It was typical for SMEs to be on 120 day payment terms so sums owed could stretch back several months. And needless to say, it is quite unlikely that many firms will receive payment under the liquidation process because the company has such huge debts.
Carillion was the second largest construction firm in the UK and in 2016 reportedly spent £952m with local suppliers, using a vast network of small firms to fulfil public and private contracts. The government has warned contractors doing purely private work will receive only a few days of support. However, ministers have indicated that support for companies undertaking public work will enjoy more protection.
PwC, which is handling the liquidation, said: “Unless told otherwise, all employees, agents and sub-contractors are being asked to continue to work as normal and they will be paid for the work they do during the liquidations.”
Carillion was involved in a plethora of government funded activities, holding 450 public contracts, including school meals provision, maintaining 50 prisons, the upkeep of homes for military personnel, providing services to hospitals and was also significantly involved in the HS2 high speed rail project and the redevelopment of Battersea power station in London.
The government has stated several times in recent years that it wants more public work to go to UK small businesses in an aid to boost the private sector and support the regions. However, this situation with Carillion shows that it is fraught with difficulties and risks. It’s still early days and we’ll see how it unfolds but it seems likely that this could be the death knell for many SMEs.
Because of the focus of Carillion’s actives, mostly in construction and maintenance, it’s probably not likely that many Tamebay readers will be impacted by Carillion’s demise, but if you are do let us know. How will you be affected?
