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Affected by the Carillion collapse?

Bahnarbeiter macht zwei Schienen bündig

As we all know, on 15 January 2018, winding up orders were made against Carillion Plc and associated companies. The court appointed the Official Receiver as the liquidator.

To ensure continuity of public services, the companies will employ workers on the same terms and conditions as before. Unusually, the Government has committed to paying the suppliers and sub-contractors the monies they are owed but this is a unique situation as Carillion are heavily involved in many Government contracts.

Usually in a liquidation the contracts of employment and supplier contracts are ended and creditors (those owed money by the company) submit their claims to the liquidator whose job it is to sell the assets of the company and pay whatever he/she can to the creditors after the costs of the liquidation have been paid. If there had been a realistic chance of finding a buyer for the business or achieving a better price for the assets then the company would have been placed in administration.

If you are owed money by Carillion in respect of goods supplied to it then check your terms of business to see whether you have a retention of title (“ROT”) clause which means that you remain the owner of such goods because they have not been paid for; if so, you can ask the liquidator to hand back the goods to you. To be valid your terms of business must have formed part of the contract with Carillion.

If you supplied services then you can only submit a claim to the liquidator in respect of the monies you are owed.

It is disappointing that the Government did not insist that Carillion pay its suppliers within 30 days  rather than the 120 days it demanded, as a condition of awarding it the very lucrative contracts such as HS2. Government contracts should insist on the main contractor paying its suppliers in a timely fashion.

Credit checks should be carried out on an ongoing basis rather than at the outset of a relationship so that if necessary credit limits and terms can be varied and work can be stopped or future deliveries delayed until the contractor has paid overdue invoices.

If you are struggling to survive financially as a result of the collapse then you should seek the advice of an insolvency practitioner who can advise you on whether the company can continue to trade or requires an insolvency rescue. Normally the initial advice is free. It is important that you do not carry on trading (and in particular do not incur further credit) if the company cannot realistically trade out of its difficulties. To do so would constitute wrongful trading and cause the directors to become personally liable for the company’s debts and might lead to the directors facing disqualification proceedings.

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