Background

Much has already been said about the demise of Carillion and the impact of its liquidation on the various parties with whom it contracted. In this article, I would like to examine what light the demise of Carillion throws on themes commonly encountered within insolvency and whether there are lessons to be learned for everyone.

Having read the various reports in the press, it is clear that whilst Carillion entered into multi-billion pound government contracts, the contracts had extremely small profit margins, ultimately rendering the business unsustainable.

UK-based offshore and subsea oil & gas services company solidifies its position and completes ownership transfer to noteholders in major company milestone.

Main contractor Carillion’s entry into liquidation has resulted in many employers seeking to establish relationships with subcontractors, under which they will be paid directly in order to stay on site and finish the relevant project. On the face of it, this seems like an attractive solution, and may leave some employers wondering why they didn’t procure their projects by construction management in the first place. However, establishing direct relations is not without risks, and requires safeguards for employers and subcontractors alike.

The Pension Protection Fund (PPF) published new forms of contingent asset agreements in January along with new contingent asset guidance. It follows its publication of a final determination and levy policy statement in December for the levy year 2018/29.

Background

In light of the collapse of Carillion, businesses have contacted us to ensure that their position with suppliers and customers are as robustly protected as they can be. Often they are not. So here are my five top tips:

1. Know your client.

The rules on contingent assets are broadly as for last year but there are developments to note. Recertification can take longer than expected if there have been changes in relation to an asset.

Trustees and sponsors should be preparing for the recertification of contingent assets that are to remain in place with a view to levy advantage for the 2018/19 year. If there have been changes in relation to a contingent asset, recertification may take materially longer than otherwise.

On 6 November 2017 the BVI Commercial Court, sitting in St Lucia, placed Sherbrooke Group Limited (Sherbrooke) into liquidation. Mark McDonald and Michael Leeds of Grant Thornton were appointed as Sherbrooke’s liquidators.

With residential leasehold law in the spotlight, landlords should be aware of a recent court case which focused upon the method of calculating the premium payable for a residential lease extension.

There are many issues that can hinder the collection of book debts and insolvency (of either the creditor or the debtor) is usually the catalyst for most them. Following an insolvency, those attempting to collect book debts are often faced with a number of reasons as to why a debtor can’t or won’t pay, including the set-off / contra arrangements, product warranty concerns, defective or non-delivery of goods or services and last, but not least, retention of title (“RoT”) clauses.