With Carillion, one of the UK’s biggest construction firms and government contractors, going into liquidation on 15 January, there are major concerns about the wider supply chain.
The company collapsed with debts estimated at £1.5 billion and suppliers and sub-contractors face uncertainty over payment.
Speaking earlier in the week to The Guardian1, former Labour transport minister, Andrew Adonis, said: “It is a bit like Lehman Brothers [the Wall Street investment bank that collapsed in 2008]. You don’t know what the impact will be. A very large part of Carillion’s work was project management where subcontractors do the work, but these subcontractors don’t know if they will be paid.”
Whilst the Black Country Chamber of Commerce has set up a dedicated helpline2 to support businesses affected by the crash, the Federation of Small Businesses (FSB)3 has also provided useful advice for any SME affected by businesses they supply going under.
Should a supplier go into liquidation, there are no guarantees of getting any money back. There are different types of liquidation, such as voluntary or compulsory liquidation, and Official Receiver (OR) is usually appointed during the earlier stages.
An Insolvency Practitioner (IP), such as BM Advisory, may be appointed and they then take control of the company. Their aim is to sell the assets and to distribute the money between the creditors.
As the FSB explains, if your SME business is affected by a supplier or business you supply to going into liquidation, there are a few practical steps you should take, including:
1. Obtain your evidence of the debt i.e. invoices
2. Register as a creditor with the OR or/and IP and complete a proof of debt form
3. Wait for further information from the OR and/or IP.
It is now more crucial than ever that SMEs put in place a business continuity plan that takes into consideration how their business will continue if one or more of their suppliers are hit by a major incident.
Our business experts at Beavis Morgan work with many entrepreneurial businesses across a range of sectors, helping them set up and run their own businesses and guiding them through each stage of the process, whilst navigating the challenges and advising them in making the right decisions both now and for the future.
Through our partner businesses, BM Structured Finance and BM Advisory, we are also able to help with sourcing and restructuring debt finance for SME businesses, as well as assisting with resolving issues which can impact on business performance and success, and finding innovative solutions for businesses and individuals in distress.
If you would like to know more about how we can assist you and your business, contact Steve Govey or your usual Beavis Morgan Partner.
Source:
1. The Guardian – 16 January 2018
2. Businesses requiring support or which have questions relating to the situation at Carillion are urged call Tel: 01902 912322 or Email: carillionhelp@blackcountrychamber.co.uk%20
3. Federation of Small Businesses – 16 January 2018