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Carillion: Liquidation- urgent action required

The liquidation of Carillion, the second largest UK construction company, will send shockwaves through the whole property and construction industry, in particular NHS Trusts, prison services and housing organisations, which in many cases have ongoing contracts with Carillion for the provision of essential services.

We are advising numerous clients on the implications of Carillion’s collapse. Our cross-sector advice to a range of key clients is focussed on minimising the damage of this liquidation and quickly procuring alternative suppliers to ensure business continuity.

What you should be doing now

If not already done, it is imperative that any parties who have entered into contracts with Carillion urgently consider the following issues, some of which may inter-relate, to ensure your interests are best protected and that works or services are progressed with limited disruption:

  1. Are you able to provide your onward services and obligations now that Carillion have gone into liquidation (e.g: can a service be guaranteed to continue from today’s date given issues such as Carillion’s employees’ uncertainties about their futures)?  And can you step in to the supply chain contracts?
  2. Do you need to carry out an emergency procurement to quickly replace Carillion? You may bring services in house temporarily. TUPE obligations need to be carefully considered.
  3. Can you safe-guard cash flow and ensure that payment terms under the contracts are fully considered and understood- for example, are there any outstanding invoices or fees which may be payable to (or from) Carillion?
  4. Can you use the works or materials which have been under the control of Carillion and which are on your site?
  5. Have all necessary notices been served under all contracts to ensure that there is no risk of default on behalf of you or any other party, regardless of culpability?

How Capsticks can help

We have an expert multi-disciplinary team who can advise on all aspects of the Carillion liquidation, including project, property and construction agreements. In the first instance please contact partners Lee Clarke, David Firth or Romano Obertelli.

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