15 Jan

Carillion PLC Collapse – Creditor & Employee Guide to Liquidation

The UK’s second biggest construction company has gone into Compulsory Liquidation today.

The company employs 43,000 staff worldwide; including 20,000 in the UK. Thousands of smaller firms also rely on Carillion’s employment.

Carillion is involved in major projects such as the HS2 high-speed rail line, as well as managing various schools and prisons. It is the second biggest supplier of maintenance services to Network Rail, and it maintains 50,000 homes for the Ministry of Defence.

Carillion might not be a household name, but over the years it has absorbed better-known businesses, including Mowlem, Wimpey and Alfred McAlpine. It also has a big international business, including a huge construction project in Qatar related to the 2022 FIFA World Cup.

Carillion was involved in three large UK public sector construction projects too; The £350m Midland Metropolitan Hospital in Sandwell, the £335m Royal Liverpool Hospital, and the £745m Aberdeen bypass. In addition, it is a big supplier of construction services to the Canadian government.

On the 15th January 2018 The Official Receiver was appointed Liquidator of Carillion Plc and certain other companies in the group:

Carillion Plc
Carillion Construction Limited
Carillion Services Limited
Planned Maintenance Engineering Limited
Carillion Integrated Services Limited
Carillion Services 2006 Limited

The Official Receiver is looking to maintain operational continuity and is continuing to trade these companies. The High Court has also appointed Special Managers to help manage the affairs of the companies.

As there are various creditors, suppliers, contractors and former employees who are inevitably going to be affected by this procedure, we want to make it as easy as possible for these people to start the process on recouping what is owed to them.


Creditors, Suppliers & Contractors

Will I get all my money back?

Unfortunately, in a lot of insolvency cases, particularly liquidations, creditors will not receive a dividend for outstanding money that the company owes.  Whether a dividend is declared and paid or not, will depend upon the level of realisations that the liquidator can achieve.  If there are sufficient funds for a distribution to creditors, then there is a procedure that distributes funds to creditors in priority order.


Where do I rank as a creditor?

When a company is placed into insolvency proceedings, creditors are paid in order of priority.  Creditors are ranked as follows:

  • Secured creditors with either fixed or floating charges
  • Preferential creditors
  • Unsecured creditors
  • Shareholders

For more information with regard to how you would rank, please don’t hesitate to contact us.


How do I make a claim for outstanding invoices and money?

To make a claim within the liquidation, you will need to first complete a Proof of Debt form and send this to the appointed liquidator.  The liquidator will send Proof of Debt forms to all known creditors.  Unfortunately, sometimes creditors are missed off the list due to incomplete company records and it is then down to the creditor to contact the liquidator to request a Proof of Debt form.


Can I collect goods that I have provided to Carillion?

You are entitled to make a claim to collect goods from the company, so long as you have the correct paper work and can prove that the goods belong to you. You will need to contact the liquidator and they will ask for proof of ownership of those particular items. The liquidator will then decide whether you are allowed to collect your goods from the premises of the company.

Please don’t hesitate to contact us for any additional advice with regard to your position as a creditor or the companies.


Employees

Will I get all my wages/salary?

Employees have the same rights as every other creditor to make a claim for outstanding wages.  Although in most cases, companies do not have sufficient funds to pay employees in full, the Redundancy Payments Office (RPO) can offer significant support. The RPO allow employees to make a claim for outstanding wages, holiday pay and to make certain redundancy claims.  Any agreed sums to be paid are usually received within 8 weeks of the claim being made.


What am I entitled to?

As an employee you are entitled to make a claim, it’s not guaranteed that you’ll get everything your employer owes you, but you can claim for:

  • statutory notice pay
  • redundancy
  • up to 8 weeks’ wages
  • up to 6 weeks’ holiday pay
  • unpaid pension contributions – speak to the liquidator to claim this for you
  • basic award for unfair dismissal

You are only entitled to claim up to £489 a week for each claim.


How do I make a claim for outstanding wages/salary?

To make a claim for redundancy you first need to make contact with the liquidator (if they have not already written to you) and they will provide you with a case reference number. Once you have received the case reference number you need to visit https://www.gov.uk/claim-redundancy. You can use the online portal to lodge your claim and the rest will be processed by the RPO and the liquidator of the company.


What is TUPE and how will it affect me?

TUPE Regulations provide protection and preserves employees’ rights when a business or undertaking, or part of one, is transferred to a new employer. There is potential that if a part of the business is sold to another entity, that your legal rights as an employee could transfer with the sale. This would need to be confirmed with the appointed liquidator.

TUPE can also stop an employee from claiming redundancy from the RPO or Liquidator if TUPE has taken effect.


What happens to my Pension?

The Pension Protection Fund has confirmed that it will now manage Carillion’s pension schemes.

A spokesperson from the PPF has said: “We can confirm that we have been notified of the liquidation. We know this news will raise serious concerns for all people involved. We want to reassure members of Carillion’s defined benefit pension schemes that their benefits are protected by the PPF.”

More information and contact details for the Special Managers can be found at www.pwc.co.uk/carillion.

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