Carillion subcontractors owed millions of pounds for work carried out prior to the firm’s liquidation should expect very little back, the head of the Insolvency Service has confirmed.
Insolvency Service chief executive Sarah Albon said Carillion’s assets were not sufficient to pay suppliers for work prior to its collapse, adding that the failed firm did not even have the money to cover the administrative costs of its own liquidation.
Speaking to MPs on the business energy and industrial strategy select committee, which is investigating the contractor’s collapse, Ms Albon said: “It is early days but it seems more likely than not that there won’t be enough assets to meet even the costs of winding up the company.”
She added: “Many of these firms [that] continue to be paid for work [going forward] will also have claims in for work before liquidation, and many will find out at the end of the day there are not sufficient funds there to pay them.”
The Insolvency Service boss said the process of assessing how many assets Carillion still had could take months, and slammed the company for “poor records”.
Ms Albon added that it had taken her team “some time” to work out how many directors were working for the firm.
When asked whether the official receiver and the receiver’s special managers PwC could claw back any of the bonuses or benefits paid out to directors prior to the liquidation, Ms Albon said it was a possibility.
She said the official receiver had “the power to claw back” any money paid inappropriately to directors by Carillion that could be considered to “the detriment of the creditors”.
The Insolvency Service boss did confirm that Carillion subcontractors that continued to work on Carillion sites would be paid, and that, when dealing with future payments for subcontractors, PwC would move away looking to move away from the 120-day payment terms of Carillion and to “industry standard” payment terms.