16 January 2018

On 15 January 2018 the court made a winding up order and appointed the Official Receiver as liquidator. Six partners from PwC have been appointed as special managers. Six entities are currently being liquidated. These are:

  • Carillion
  • Carillion Construction Limited
  • Carillion Services Limited
  • Planned Maintenance Engineering Limited
  • Carillion Integrated Services Limited
  • Carillion Services 2006 Limited.

In this article, we explain the key terminology and look at the considerations for customers, suppliers, JV parties and interested parties.

What is compulsory liquidation?

This is a terminal insolvency procedure and means that any residual value in the company’s assets and business will be realised where possible and ultimately distributed to creditors. Carillion was put into liquidation by its directors. The Official Receiver has been appointed by the court to manage the liquidation.

At the moment, we understand that the companies are continuing to trade.

The role of special managers

In addition to the Official Receiver, PwC have been appointed as ‘special managers’ to assist. Special managers are more rare and they are usually appointed to assist the liquidator (here, the Official Receiver).

The scope of their powers and their responsibility over the business or property of the companies is set out in their order of appointment. They remain officers of the court.

What is the current situation?

It’s unclear at this stage what strategy the Official Receiver and the special managers will follow in this instance. Not all companies in the Carillion group are in an insolvency procedure and we continue to monitor the situation.

Initial reports indicate that the priority is to ensure the continuity of public services and that funding has been made available for this purpose. Private contracts will not be funded; options under these will depend upon the terms of the out-sourcing contract or JV agreement.

Commercial issues to consider

It is important that affected parties understand their contractual rights and consider the potential impact that insolvency principles may have on any strategy. Below we outline some key questions for affected parties to consider.


  • Preserving continuity in supply; should outstanding sums be paid and to whom?
  • What termination rights are available?
  • How should communications with special managers be conducted?
  • Are there any employment risks?


  • What contractual rights are available?
  • Are sums outstanding? Do you have retention of title or other title claims?
  • Communications with other counter-parties
  • Are there any cross default issues?

JV parties

  • Consider the terms of the JVA. Are transfer rights available and, if so, on what terms?
  • Are there valuation issues to consider?
  • Consider funding and cross default issues.

Interested parties

  • The special managers are exploring sales of the business and assets
  • Consider your strategy for dealing with the special managers and assess how best to structure an offer

Insolvency issues to consider

Potential breach of pari passu and anti-deprivation principles:

  • Carefully consider receipt of any third party payment (e.g. under direct payment clauses) as these may be subject to claw-back.
  • Automatic transfer of shares under a JVA could be considered an asset of value to Carillion’s liquidator.

Employment issues:

  • TUPE does not apply and employment rights are automatically terminated.
  • Beware unintended employment issues if you continue to pay third party workers.
  • Consider if new agency / employee terms are needed to regulate engagement with workers.

Disclaimer rights available to the liquidator:

  • “Onerous” contracts can be disclaimed by the liquidator.
  • Disclaimer does not terminate any other party’s obligations.
  • Consider your own termination rights to end obligations.

Insolvency set off issues:

  • Insolvency set off is mandatory.
  • Only the balance of sums owed by the insolvent company can be proved in the liquidation.

How can Burges Salmon help?

Liquidations such as Carillion raise complex and urgent commercial issues. We regularly advise companies, insolvency practitioners, creditors, regulators, investors and other stakeholders on all forms of restructuring and insolvency matters.

Our team of over 30 experienced lawyers are drawn from all sectors so that we can tailor a team or focus on a specific area to suit your needs. This includes construction and engineering, procurement, energy and pensions insolvency specialists.

If you wish to discuss your corporate response to Carillion’s liquidation, or any other potential insolvency, please contact Andrew Eaton or your usual Burges Salmon contact.

Key contact

Andrew Eaton

Andrew Eaton Partner

  • Corporate Restructuring and Insolvency
  • Private Equity
  • Banking and Finance

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