Confidential Advice Line: 0800 063 9221

Carillion subcontractors urged to seek help to stay afloat

Liquidation

| January 17th 2018

More News by Ayman Fazeli

Carillion subcontractors urged to seek help to stay afloat

Carillion subcontractors and other small firms which might be at risk due to the failure of the construction giant are being urged to seek professional advice at an early stage to help safeguard their future.

Paul Barber, North West chair of the insolvency and restructuring trade body R3, says firms which are owed money need to assess what impact it will have on their business and clearly understand their options.

Subcontractors and suppliers are usually classed as unsecured creditors, and come behind secured creditors, such as banks, and employees in the queue for payment. Firms are being told to contact the liquidator for information on their specific case.

Paul Barber, who is also a partner at Begbies Traynor, says firms could be affected in a number of ways.

“For subcontractors awaiting payment for work carried out, there will be an immediate impact on cash flow. They will of course still be expected to pay any outstanding labour or materials costs for the work they have incurred or purchased and make VAT payments due to the crown authorities which may in some cases include their invoices to Carillion.

“But also in the period ahead there will also be an impact on their balance sheet. Bad debts and work in progress may have to be written down, weakening the balance sheet strength. If not risking insolvency, in practical terms it could affect their credit rating, making it harder for them to raise finance, or their ability to win future work since in many formal tendering processes, the balance sheet is used as a part measure of their stability.

“Many small subcontractors do not have cash reserves or assets to fall back on so will be in a vulnerable position. It is all the more galling as with this type of work it can  be that the sub-contractor has carried a lot of the risk inherent in the main contract as often seen by way of  low margins and extended payment terms of 90 days or more.

“Those which might be at risk should take professional advice as soon as possible and understand that the best option might be – for example, raising finance to overcome immediate cashflow problems, negotiating with their own creditors or even a formal insolvency procedure.”


About the author

Ayman Fazeli

Editor

Meet our Team of Experts

Ayman is a journalist with wide and varied experience in business and financial sectors and has worked specifically in digital content since 2003. He heads up our sizeable content team and his specialties include issues surrounding company insolvency and director advice. He has written for a number of national and regional newspapers, including the Daily Mail and various Trinity Mirror publications.

Related news stories

55 Regional UK Offices

Find your local Begbies Traynor office and speak to an adviser today.

Find your Local Office
0800 063 9221

Call our Confidential Advice Line. Calls to this number are free of charge.

Call us now...
Request a Meeting

We invite you to come and discuss your enquiry with us at your convenience.

Request a meeting...
0800 464 0871

Call our Confidential Advice Line. Calls to this number are free of charge.

Call us now...
Request a Meeting

We invite you to come and discuss your enquiry with us at your convenience.

Request a meeting...
0161 837 1700

Call our Confidential Advice Line. Calls to this number are free of charge.

Call us now...
Request a Meeting

We invite you to come and discuss your enquiry with us at your convenience.

Request a meeting...
Gin festivals cancelled as organiser placed into administration
Begbies Traynor appointed as administrators of Gin Festival Limited
20 festivals planned for the coming months have been cancelled
Read More →
 
Join thousands of professionals by signing up for our updates
Analysis and Opinion from our Partners
Top Industry News
Register Now →
 

Advice you can trust

We are accredited by the following industry leading organisations

Insolvency Practitioners Association Institute of Chartered Accountants in England and Wales R3: Association of Business Recovery Professionals ICAEW Business Advice Service Turnaround Management Association ACCA (the Association of Chartered Certified Accountants) ICAS | The Institute of Chartered Accountants of Scotland

Contact the Begbies Traynor team

or Find your Nearest Office

Here at Begbies Traynor Group we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See PRIVACY POLICY

Processing...