Home news Carillion: trade insurers to pay out £31m

Carillion: trade insurers to pay out £31m


Insurers are expected to pay out £31m to suppliers hit by the collapse of construction and outsourcing giant Carillion, it has been estimated.

The figure from the Association of British Insurers (ABI) relates to claims on trade credit policies, which cover firms against the risk of not being paid for goods or services that they provide following a company going bust, or political upheaval.

Carillion, which ran a host of public services as well as building roads and hospitals, went into liquidation last week under a the weight of at least £2.2bn in debt and pension liabilities.

The collapse of the company, which employed 20,000 people in the UK, left thousands of suppliers and subcontractors who were owed money in limbo.

ABI assistant director Mark Shepherd said: “One insolvency can risk a domino effect to hundreds of firms in the supply chain.”

The figures came as engineering contractor Van Elle, which regularly carried out work for the business, said the collapse would have an impact on it and could affect its ability to achieve full-year profit expectations.

It said it had pencilled in a £1.6m bad debt charge and identified £2.5m of anticipated revenue for the second half of its financial year related to its work with Carillion.

Chief executive Jon Fenton said the company had had “constructive dialogue” with the Official Receiver handling Carillion’s collapse, and Network Rail, over the contracts but while they may still be delivered in the current year, the “status and timing of specific programmes remains uncertain”.

Its shares opened 2% lower.

Meanwhile, Carillion rival Kier said that it and French civil engineering company Eiffage had taken over responsibility for the HS2 rail joint venture which it had been running with the collapsed firm.

It also said it had assumed full responsibility for the Highways England smart motorways scheme on which it had been also working with Carillion.

Both contracts were “performing well, operationally and financially”, Kier said.

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The update came in a well-received trading update from the group which saw shares rise 10% as it said it remained on course to deliver double-digit profit growth for the full year.

On Wednesday, two select committees launched a joint inquiry into Carillion’s collapse, which will see MPs question former bosses at the firm.

Source: SKY