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Carillion creditors could receive under 1p in the £1

Carillion creditors could receive under 1p in the £1

The companies owed money by collapsed construction firm Carillion, could receive as little as 1p for every £1 owed.

The firm fell into administration earlier this week after banks declined to further bankroll the business and the government ruled out a wholesale bailout of a private company.

Keith Cochrane, who was Carillion’s CEO, said in a statement to the High Court yesterday that RBS had ‘undermined the group’s efforts to conserve cash’ by asking it to pay suppliers two days early. He said this adversely affected Carillion’s liquidity by up to £20 million. It had just £29 million in cash when it teetered into administration, with debts of over £2 billion.

Peter Kubik, an accountant at UHY Hacker Young, said the insolvency process was only likely to recover ‘an average of between 0.8p in the pound and 6.6p’.

The business folded under the pressure of £1.6 billion in debt and a pension deficit of £587 million.

Papers seen by the FT reveal that it also had £630 million of ‘bonding facilities’ and £350 million of invoice finance, which is expected to leave 13 banks, including RBS, Lloyds, Santander, Barclays and HSBC, among others, out of pocket.

Business secretary Greg Clark has called on the Insolvency Service to ‘fast-track’ an investigation into the actions of Carillion’s directors before the firm’s demise.

He warned that ‘any evidence of misconduct will be taken very seriously’.

 

 

 

 

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