Thousands of businesses at risk in Carillion fallout

Bankruptcy Blog Debt Insolvency Liquidation SMEs

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Up to 30,000 small businesses may not get paid after the fold of construction giant Carillion, reports warn.

The firm fell into liquidation on Monday as it became apparent that the state could not save the company from imminent collapse.

Carillion, which employs around 20,000 people in the UK and contracts thousands more small firms, has debts of around £1.5 billion.

The Government said it would step in and bail out a number of state-backed projects Carillion is currently working on, including HS2 and hospital maintenance, but private projects are on their own.

Mike Cherry, the head of the Federation of Small Businesses (FSB), said thousands of firms are now at risk of insolvency.

“These unpaid bills may well go back several months,” he said.

“I wrote to Carillion back in July last year to express concern after hearing from FSB members that the company was making small suppliers wait 120 days to be paid.”

Suzannah Nichol, chief executive of trade body Build UK, estimates that up to 30,000 firms may be affected, some with bills equivalent to 10 per cent of turnover.

She added: “Looking at previous cases where large contractors have collapsed, you typically see that around 17 per cent or 18 per cent of businesses who are creditors to the company don’t make it through the next five years.”

Liquidators for Carillion have urged firms “to continue work as normal and they will be paid for the work they do during the liquidations”.