Why UK construction giant Carillion declared bankruptcy

The future of contracts both locally and overseas are thrown into question

New York Weekend Edition /
Jan.January 20, 2018 11:38 AM

(Credit: Pixabay)

A crisis in the U.K.’s construction industry came to a head this week: construction giant Carillion declared bankruptcy this week in a move that reports say has shaken the U.K’s public confidence in private corporations and throws contracts all over the world into question.

The second-largest contractor in the U.K. throws into question its 450 contracts with the U.K. government that includes two state-of-the-art hospitals, a regeneration scheme in Durham, and several billion-dollar infrastructure contracts for the HS2 high-speed rail link and the Aberdeen bypass in Scotland — all in addition to contracts overseas in Canada and in Qatar, according to the New York Times.

The BBC reports Carillion was also responsible for initiatives such as a lunch-delivery program for about 200 students and maintaining living facilities for about 50,000 members of the military. The company employed 20,000 people in the country and another 23,000 overseas.

Though financial woes were not new, the contractor was working on negotiating new terms of its loans, which amounted to about a $1.8 billion debt by the end, but told the BBC that banks declared their proposed restructuring not viable and demanded lending conditions the company could not meet.

In documents, chief executive Keith Cochrane pointed fingers in particular at Royal Bank of Scotland for what he called “unilateral action which in the company’s view undermined the group’s efforts to conserve cash.”

Business Secretary Greg Clark request a government investigation into the conduct of current and former directors be launched, as well as the company’s auditors, KPMG.

“It is important we quickly get the full picture of the events which caused Carillion to enter liquidation,” Clark told the BBC. “Any evidence of misconduct will be taken very seriously.”

Meanwhile, 30,000 architects, small contractors and other small businesses worked for the construction giant and are either owed money or now are facing the loss of one of their primary clients.

[BBC] — Erin Hudson


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
East Hampton Town Supervisor Peter Van Scoyoc and 350 Pantigo Road (Zillow, Getty, Town of East Hampton)
Hamptons town could buy former department store land to build homes
Hamptons town could buy former department store land to build homes
Reynolds Asset Management's Lou Reynolds and 7-15 W Main St in Bound Brook, NJ (Illustration by Kevin Cifuentes for The Real Deal with Getty Images, Loopnet, Reynolds Assets Management)
Tri-state roundup: These New Jersey and Long Island deals aren’t turkeys
Tri-state roundup: These New Jersey and Long Island deals aren’t turkeys
Maefield Development's Mark Siffin and 20 Times Square (aka 701 Seventh Avenue) (Getty, Edition Hotels)
Massive loan on Maefield’s 20 Times Square in trouble
Massive loan on Maefield’s 20 Times Square in trouble
From left: Silverstein Properties CEO Marty Burger; BedRock Real Estate Partners co-founder Tracey Applebaum; Council member Julie Won; a rendering of Innovation QNS in Astoria (Getty, BedRock Real Estate Partners, New York City Council)
Council approves Silverstein, BedRock’s $2B Innovation QNS
Council approves Silverstein, BedRock’s $2B Innovation QNS
Signature's Joseph DePaolo (Getty, Signature)
FTX crash could hit Signature’s multifamily lending
FTX crash could hit Signature’s multifamily lending
Silverstein Properties' Marty Burger, City Council Speaker Adrienne Adams, BedRock Real Estate's Tracey Appelbaum, City Council member Julie Won and Mayor Eric Adams with rendering of Innovation QNS (Silverstein Properties, Getty, New York City Council, Innovation QNS)
5 lessons from Silverstein’s Astoria deal
5 lessons from Silverstein’s Astoria deal
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...