On 15 January 2018, Carillion, the UK’s second-largest builder and one of the Government’s largest contractors, was placed into compulsory liquidation and the Official Receiver was appointed as liquidator, with Michael John Andrew Jervis, David James Kelly, David Christian Chubb, Peter Dickens, David Matthew Hammond and Russell Downs of PwC being appointed as special managers to assist in the wind down of the business and realisation of its assets.

As has been widely reported, Carillion companies are being liquidated. This will affect their suppliers and the extended supply chain, including suppliers of contract workers and CIS subcontractors. There will be a lot of focus on debt and enforceability of things like pay when paid clauses (which, contrary to popular belief, are not always enforceable).

Construction giant Carillion is headed into liquidation, putting billions of pounds worth of contracts into potential chaos.

The fallout from the failure of the UK’s second largest construction firm will affect many and generate many column inches asking the fundamental question: how could it happen? The truth is, the construction sector remains extremely difficult, and a large failure of this type had been expected by industry watchers for some time.

The Pugachev tale

Key points

• Failure to comply with sections 333 and 363 of the Insolvency Act constitutes contempt of court for which a committal order may be obtained.

• A trustee in bankruptcy should not usually require permission to apply for a committal order.

• Correct procedure for application confirmed by the court.

The recent decision in Leeds v Lemos may create significant problems for Trustees in Bankruptcy as they attempt to fulfil their duty of realising a Bankrupt’s estate for the benefit of his creditors.

The case centred on the wish of the Trustee in Bankruptcy to rely on documents that the Bankrupt (and some third parties) claimed were privileged. The Trustee in Bankruptcy therefore asked the Court to compel the Bankrupt to waive privilege, so that the documents could be referred to in legal proceedings..

Attachment of earnings - money is paid directly from the judgment debtor’s wages/salary into court by the debtor’s employer to satisfy the judgment debt.

Bankruptcy proceedings - you can currently apply to make an individual judgment debtor bankrupt for a judgment debt in excess of £5,000. The limit is £500 for applying to put a company into liquidation. The nuclear options.

A recent decision of the High Court (Goel and another v Grant and another [2017] EWHC 2688 (Ch)) has provided a useful reminder that care must be taken when administrators enter into pre-contract negotiations and the risk of inadvertently entering into a binding contract before terms are finalised. It also deals with the risks of disposing of assets, even those that are difficult to value, without due process.

The Facts

On 12 December 2017, creditors in the long running special administration of failed stockbroking firm, MF Global UK Limited (“MF Global”), approved a company voluntary arrangement (“CVA”). This case demonstrates the flexibility of the CVA procedure and the role it can play in complex financial services cases.

What is a CVA?

Question

My client is buying a property from a receiver appointed under an equitable charge granted by a company which has become insolvent. The charge gives a receiver a power of sale and contains a power of attorney. Will the receiver be able to sign all the necessary documents to allow the transaction to proceed to completion?

Answer