UK contracting and services giant Carillion will now go into liquidation after weekend talks with the government failed to secure a necessary financial lifeline.
Its chairman Philip Green called it a "very sad day" in a 7am statement today to the London Stock Exchange.
The statement said that government would pay to maintain the public services outsourced to Carillion, potentially saving thousands of jobs.
But the fate of staff in its commercial contracting operations in the UK and around the world is not yet known.
Employing 43,000 people in total, Carillion manages nearly 900 school buildings in the UK, is the second-largest supplier of maintenance services for Network Rail, and holds £200m worth of prison contracts. It also maintains 50,000 homes for the Ministry of Defence.
An application was made to the UK High Court for a compulsory liquidation of Carillion before opening of business today and an order has been granted to appoint the Official Receiver as the liquidator, Carillion said.
The company said it expected PricewaterhouseCoopers to be appointed as Special Managers, to act on behalf of the Official Receiver.
"Carillion continued to engage with its key financial and other stakeholders, including Her Majesty’s Government (‘HMG’), over the course of the weekend regarding options to reduce debt and strengthen the group’s balance sheet," the statement said.
"As part of this engagement, Carillion also asked those stakeholders for limited short term financial support, to enable it to continue to trade whilst longer term engagement continued.
"Despite considerable efforts, those discussions have not been successful, and the board of Carillion has therefore concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect."
Philip Green, Chairman of Carillion, said:
"This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years. Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the Board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.
"In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision. We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers."
Image: The fate of staff in Carillion’s commercial contracting operations in the UK and around the world is not yet known (Carillion)
More on the Carillion crisis:
I hope for thousands of affected Carillion and ex Carillion employees and stakeholders that the current conservative government looks at the original agreements it’s previous regimes made with Tarmac Mowlem and others to privatise the government owned Property Services Agency at the time within its Department of Environment, where very robust promises were made regarding the rights and terms and conditions and future pensions at the time of transfer. Carillion was born out of this political process, and as one of its first employees it is a very sad day. I feel for all involved especially for those starting their careers but it is my view the government whatever is political angle has to adopt the overall responsibility and support and honour promises made to thousands of people to the fullest level of its previous actions and its defined and moral obligations.
Its all down to the Ego’s of those in charge, tendering at too lower margins, poor commercial managers screwing everyone down on price, taking 60 days credit [always a bad sign] then subbie bashing at the final account stage and employing incompetent managers on site. We worked on a site where the roofing contractor failed, then the cladding contractor and they wanted the interior works to carry on despite the rain and they wonder why they go bust. The Grenfell tower issue will be down to a commercial manager going cheap not suitability or quality.
We only worked for Carillion once! We did get paid in full, we always declined their enquiries after that.
The problem currently with the industry is profit is a dirty word and everything is cut to the bone and there are too many people with good degrees who think they know what they are doing but they actually know very little. Employers to not know how to get what they think they are paying for and value for money.
Governments have no idea what they are doing when they see these good ideas like PPI and Outsourcing. Its a shame but we will never learn. I just feel very sorry for all of those Subbies and suppliers who are going to go into liquidation and quite possible loose their homes and everything, the reckless Carillion Directors will be OK
Having worked with Carillion I agree with Bill Price
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