Construction and engineering giant Carillion has collapsed after last-ditch talks with lenders and the government failed.
The company ran into trouble after losing money on a series of large contracts and running up huge debts.
The lenders pulled out after the government refused to guarantee the firm’s debts, leaving Carillion without the cashflow required to continue as a business.
The failure of Britain’s second biggest construction firm puts thousands of jobs at risk in the UK and abroad. The company employs 43,000 people worldwide, including 20,000 in the UK.
Thousands of smaller firms contracted by Carillion to perform work are also at risk of being left with unpaid debts, which could make some unsustainable.
Carillion is a major government services supplier and is involved in managing schools and prisons and well as the construction of the HS2 high-speed rail line. It’s failure means the government will have to provide the funding required to maintain the public services supplied by the firm.
Cabinet Office minister David Lidington said “All employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do”.
A court-appointed receiver will review Carillion’s business over the next few months with the aid of a team of experts from PwC, and will determine a course of action.
Meanwhile, Labour has called on the government to answer questions on how Carillion continued to win lucrative government contracts, including a £1.4bn joint-contract for constructing HS2, a £158m catering contract with the MoD, and a £12m schools building contract, after it issued profit warnings that showed the firm was in financial trouble.