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Carillion collapse: Insurers pay out £30m to suppliers

Insurers have said they will pay more than £30m to businesses owed money by collapsed construction giant Carillion. Sums ranging from £5,000 to several million pounds are being paid to firms which had insurance policies against bad debts.However, most of Carillion’s suppliers risk getting little or nothing back, as only a minority of firms had the cover.Carillion went under last week with £1.5bn debt, leaving its 30,000 suppliers facing an uncertain future. ‘Domino effect’Mark Shepherd at the Association of British Insurers said: “One insolvency can risk a domino effect to hundreds of firms in the supply chain.”The association said that about £31m will be paid out for trade credit insurance, which covers firms against the risk of not being paid if a company that it does business with collapses. Carillion, which was the UK’s second biggest construction firm and a major service provider for the government, went into liquidation with a £900m debt pile and £600m pension deficit.

Small businesses are owed £141,000 on average by Carillion, according to a survey of building, engineering and electrical firms by industry bodies.Medium sized ones with 50 to 250 employees are owed typically £236,000, while larger firms face an average shortfall of over £15m. The firm’s cleaning, catering and other public service work has been kept going and much of its private sector work is being revived, but most of its outstanding debts remain, according to BBC personal finance correspondent Simon Gompertz.It comes as Labour put further pressure on the government on Wednesday to publish the risk assessments it did into Carillion before its collapse.Cabinet Office minister David Lidington said it would release the information to the Public Accounts Committee, but had to ensure it did not release anything commercially sensitive.The Pensions and Business Committees in parliament confirmed on Wednesday that they will grill several Carillon bosses on 6 February.They include former chief executive Richard Howson, chairman Phillip Green, interim boss Keith Cochrane and ex-finance chiefs Richard Adam, Zafar Khan and Emma Mercer.It comes after a backlash over Mr Howson’s pay packet during and after his tenure, as well as that of Mr Khan and Mr Cochrane.Carillion is the latest high-profile collapse, after companies including Monarch Airlines, tobacco supplier Palmer & Harvey, and furniture retailer Multiyork went under.
Source: BBC News

About Business Ideas UK

My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups.

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