The government has promised to provide funding to ensure all of Carillion’s government contracts continue following the compulsory liquidation of the firm this morning, LGC’s sister title Construction News reports.
The Cabinet Office said it would provide all of the “necessary funding” to Carillion’s official receiver to maintain public services across the 450 government contracts Carillion held.
Minister for the Cabinet Office David Lidington said: “We understand that some members of the public will be concerned by recent news reports.
“For clarity – all employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do.”
The government also confirmed that former Carillion workers receiving pensions would continue to receive payments as normal.
After a meeting with its lenders over the weekend, the firm announced this morning its decision to initiate insolvency proceedings.
The company went into receivership with debts of more than £900m and a pension deficit of £600m. LGC reported in July how Carillion was battling with profit warnings on contracts relating to public-private partnership projects worth £845m.
Mr Lidington said that while the Carillion news was disappointing it was the government’s primary responsibility to ensure public services continued to run safely.
He said: “It is regrettable that Carillion has not been able to find suitable financing options with its lenders but taxpayers cannot be expected to bail out a private sector company.
“Since profit warnings were first issued in July, the government has been closely monitoring the situation and has been in constructive discussion with Carillion while it sought to refinance its business. We remained hopeful that a solution could be found while putting robust contingency plans in place to prepare for every eventuality.”
This morning Carillion made its application to the High Court for compulsory liquidation after a rescue plan was rejected by its lenders.
Carillion chair Philip Green said: “This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.
“Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the Board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.
“In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.”