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Carillion was forced into liquidation last Monday putting thousands of contractors and small businesses in an uncertain position.
Industry groups and business analysts are concerned that Carillion’s collapse could send shockwaves through the economy, causing more firms to close.
Industry group Build UK estimates that the company and its subsidiaries owe up to 30,000 businesses more than £1bn in unpaid costs.
Suzannah Nichol, Chief Executive of Build UK said: “Looking at previous cases where large contractors have collapsed, you typically see that around 17pc or 18pc of businesses who are creditors to the company don’t make it through the next five years.”
On Thursday, the Government announced a task force to support small businesses.
The Business Department announced that the task force will include businesses, unions and the Government, but so far it is unclear what powers the task force will have.
With thousands of small firms in the company’s supply chain, it is unlikely that they will all recover all of the money that they are owed.
Unless the government takes radical action, accountants estimate that smaller firms will recoup less than 1p from every pound that they are owed by Carillion.
Umbrella Accountants Licenced Insolvency Practitioner Thomas Fox said: “Sole traders and small firms in Carillion’s supply chain have been put in a very anxious position.
“Under insolvency law, secured creditors, which are mostly banks, will get the first bite of the Carillion cherry, with a very small portion ringfenced for it’s trade creditors who are owed more than £100 million in total.
“Companies who got the lion’s share of their work from Carillion may now be facing serious financial problems of their own. The Government task force may bring some comfort, but they will need to act very quickly if small companies are to pay wages and avoid cash shortages, HMRC action and other legal challenges.”
What to do now
The first thing to do is to register as a creditor of Carillion. You can do this if you haven’t been paid for goods or services that you’ve supplied to Carillion or if you have paid for goods or services that you haven’t received.
You should monitor announcements on Carillion closely and assess exactly what kind of help is offer to you through the Government task force.
You may also be able to get assistance from your bank, Lloyds HSBC and RBS have all announced support packages, but the support may not go far enough.
If you have trade insurance policies then you should contact your provider to see whether or not your losses will be protected.
If you have exhausted these options or if your business’s financial situation is particularly acute then it may be time to consider more significant action.
Businesses that are in this position have many options open to them but it is important that you consult a qualified business debt professional before pursuing any course of action.
If you are the director of a company that’s owed money by Carillion, get in touch today. Our qualified team of debt professionals can arrange a free, confidential consultation to suit your needs. Visit www.umbrella.uk or Call: 0800 611 8888.