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Industry News: Carillion Liquidation to Recover £510m

Carillion liquidation to recover £510m

Carillion’s liquidators have estimated they will recover just over £510m, with some of this going to creditors.

Just over £500m has been recouped from invoices, asset sales, insurance payouts and other debtor recoveries since the £4bn firm collapsed on 15 January last year.

Carillion’s liabilities were estimated to be as much as £7bn.

The government’s official receiver, David Chapman, who is overseeing the winding up, estimates a further £10m will be recovered.

Creditors of 20 Carillion companies are expected to receive some level of payout from the liquidation, with the remaining 61 firms that are being liquidated yielding nothing.

Mr Chapman revealed the progress in a letter to the co-chairs of the Carillion Inquiry, Rachel Reeves and Frank Field, which was published on 5 November, the day before parliament was dissolved.

A chunk of the money recovered will go towards paying the bill of PwC, which has assisted with the liquidation. Its fees to date stand at just over £52m, Mr Chapman said.

Around 14 staff from PwC are still working with the Official Receiver to help with legal cases against parties involved with Carillion.

At the peak of activity between January and March last year more than 155 PwC staff were working on the liquidation.

A vast majority of Carillion staff were able to effectively keep their jobs following the contractor’s collapse, Mr Chapman said. The bulk of the 84 per cent of workers who kept their jobs were transferred to new contractors.

Around 16 per cent of Carillion staff were made redundant, however.

Letters from the Financial Reporting Council and Cabinet Office minister David Lidington were also published on 5 November.

The FRC said it was still investigating the auditing of Carillion’s accounts between 2014 and 2017, the actions of former finance directors Richard Adam and Zafar Khan, and potential misconduct by KPMG in handing over information to the FRC for periodic assessment of its auditing quality.

Decisions on whether to proceed with enforcement action are expected by mid-March next year.

Mr Lidington defended the effectiveness of the Crown Representatives, who oversee the performance of the government’s biggest suppliers, such as Carillion.

Shortly before Carillion collapsed last year, Construction News revealed the company had no Crown Representative oversight between September and November 2017. This covered the period of the company releasing its half-year results, which revealed a £1.15bn pre-tax loss.

Mr Lidington conceded that the government should have had a crown representative for Carillion in place for the whole of 2017.

Even if the overseer had been in place, the company would have still collapsed and the government’s response would have been no different, he added.

Source: Construction News, Carillion liquidation to recover £510m, 13th November 2019. Read the full article here.

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