Fladgate have released guidance for any organisation or person who have contract with or are owed money by Carillion.
On 15 January 2018 Carillion PLC and a number of its subsidiary companies (Carillion) went into liquidation, with the High Court appointing the Official Receiver as liquidator and six partners of PWC as special managers.
Those clients who have contracts with Carillion or who are owed money may find the following guidance useful:
• Check “event of default” clauses in contracts. You might have a right to terminate for insolvency, which releases you from ongoing obligations. You should not assume that because Carillion is in liquidation you have no further obligations.
• If you have an unsecured debt claim, there is not likely to be any action you can take, aside from submitting a proof of debt in due course. Your claim is likely to rank pari passu with the claims of other unsecured creditors. If your services are crucial to some ongoing aspect of Carillion’s business, you might have commercial leverage.
• Do you have security over any assets for sums due to you? If so, you may have the right to take action, quite independently of the liquidation process.
• If you have a defects claim under a contract, consider the Carillion entity involved and make enquiries as to the availability of insurance cover.
• Consider your own insurance coverage – are you insured against loss flowing from counterparty insolvency?
• If you have a joint venture agreement with a Carillion group company, consider whether you have a right to terminate, step in or buy out the Carillion share as a result of the insolvency.
• If you have supplied goods to a Carillion group company, consider whether you have an effective retention of title provision in your supply contract which could be enforced now.
• If you lease property or equipment to a Carillion group company, consider whether you have a right to repossess your goods or claim your rental payments as a liquidation expense in priority to ordinary unsecured claims.
• If you have allowed a Carillion group company to use your drawings, computer programs or other intellectual property, you might now be able to prevent them from continuing to use these rights without payment.
• If Carillion has provided you with any third party security such as performance or other guarantee bonds, these should be checked to make sure any right to claim under them is preserved.
• If you are a subcontractor or supplier to Carillion, does your ultimate client have rights to take over your appointment and if so are they obliged to pay any outstanding fees? Any warranties you have given should be checked to understand your rights and whether there are any third party conditions to be complied with before you could terminate.
The insolvency appointment procedure used for the Carillion group is unusual for a group of this size and complexity. In some cases this may make the analysis of creditors' rights different from that in more conventional cases. It may also mean that there will be further procedural developments, which may take place quickly and change the available remedies of claimants.
In many cases, your rights will be prejudiced if you do not act quickly.
If you require advice on any contract with or claim against Carillion, please contact:
T +44 (0)20 3036 7220
T +44 (0)20 3036 7377
T +44 (0)20 3036 7277