Support for SMEs affected by Carillion liquidation
On 15 January 2018 it was confirmed that Carillion plc, Britain's second largest construction firm, had entered compulsory liquidation.
Carillion used an extensive network of small firms, many of whom remain creditors of the company.
One industry group estimates that up to 30,000 firms are owed money by Carillion.
On 18 January a new task force, set-up by the Department for Business, Energy and Industrial Strategy (BEIS), met to discuss what action is being taken to support SMEs in Carillion’s supply chain.
ICAEW participates in the BEIS SME Advisory Board and is supporting the task force in cascading information and guidance for SMEs affected by Carillion’s collapse.
Specific initiatives that have been announced so far:
Banks
Banks have agreed to maintain product terms and not withdraw products and be flexible with repayments.
UK Finance have issued a statement setting out the support that the banks have agreed to provide:
“UK banks and the Government are working closely to make sure the impact of the Carillion liquidation on SMEs in the supply chain is understood and managed in a way that best supports those in need of assistance. Lenders are contacting customers and, where appropriate, are putting in place emergency measures, including overdraft extensions, payment holidays and fee waivers to ensure those facing short term issues can be helped to stay on track.”
Special funds of £200m have already been announced by Lloyds Banking Group, HSBC and RBS. In addition to this, the British Business Bank will be making available up to £100 million of lending to SMEs who do not have the assets needed for security to access conventional bank lending. This will be offered through the Enterprise Finance Guarantee programme and can be used to support overdraft borrowing and refinancing of existing debt.
Firms are encouraged to discuss the situation with their bank and other lenders as soon as possible.
HMRC
To support businesses contracted to Carillion, HMRC is providing practical advice and guidance to those affected through its Business Payment Support Service (BPSS).
HMRC have stated that the BPSS can:
- agree instalment arrangements if you are unable to pay your tax on time following the Carillion collapse
- suspend any debt collection proceedings
- review penalties for missing statutory deadlines
- reduce any payments on account
- agree to defer payments due to short-term cash flow difficulties
Insolvency Service
The Insolvency Service have contacted all of Carillion’s private sector service customers to “determine their ongoing needs”.
Furthermore, it said that “over 90% want Carillion to continue providing services in the interim until new suppliers can be found and will provide funding which enables the Official Receiver to retain the employees working on those contracts”.
The Insolvency Service also confirmed that work has paused on construction sites, pending decisions as to how and if they will be restarted.
Resources
ICAEW: Restructuring and Insolvency guidance
Early action is the key to businesses avoiding or surviving financial difficulties. This guidance covers: how to recognise issues when they arise, what advice to seek and who to approach. It explains the role of licensed insolvency practitioners, the six signs an organisation is in distress and the seven stages of business recovery.
Business Payment Support Service (BPSS)
BPSS Helpline: 0300 200 3835
Insolvency Service
- Information for employees, creditors and suppliers
- How to claim money back from companies in liquidation
PWC Carillion
The Special Managers, PWC, have set up a dedicated website offering further information and contacts for customers, employees, landlords, suppliers, pension scheme members and interested parties.
Helpline: 0800 063 9282
BEIS Business Support Hotline
The government’s Business Support Helpline offers free general advice.
Helpline: 0300 456 3565
Local Growth Hubs
The local growth hubs are “on hand to help businesses of all sizes and in all sectors to access support”. A directory of the local growth hubs with their contact details can be accessed through the LEP Network website.
