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Carillion group of companies declared insolvency and the Official Receiver, an employee of the Insolvency Service, started to liquidate its assets and contracts.
Following a further profit warning in November 2017, the Cabinet Office wrote to Carillion to say that it proposed rating Carillion as its highest risk category, ‘high risk’.
Ultimately, the Cabinet Office received 65 contingency plans from 26 public bodies, fewer than the number sought.
Carillion also requested help with the longer-term financial restructuring including: asking the Cabinet Office to provide up to £125 million towards the completion of Midland Metropolitan Hospital PFI scheme in return for an equity stake; favourable settlement of claims with public sector customers; and support in arranging a solution for the £2.6 billion pension liabilities with the Pension Protection Fund, Pension Trustees and Pensions Regulator.
The Cabinet Office decided it was better that Carillion enter into a trading liquidation than to provide financial support.
The Cabinet Office carried out an options appraisal and concluded that the best result for government across a range of criteria would be a trading liquidation – that is, where Carillion entered liquidation, but would continue to provide services until other arrangements could be made for each contract.
