Directors of Carillion, a management and construction services company, will not receive any bonuses arranged beyond its date of liquidation.
Winding up orders were made for Carillion after it announced plans of declaring insolvency on January 15.
The Official Receiver, who works for The Insolvency Service, has been appointed as liquidator. Mike Jervis, David Kelly, David Chubb, Peter Dickens, David Hammond and Russell Downs of PwC, have been chosen as special managers to work alongside The Official Receiver.
The Business Secretary Greg Clark has written to the Insolvency Service and the Official Receiver asking that the statutory investigation into the conduct of Carillion’s directors is fast-tracked and extended in scope.
This means the Official Receiver’s investigation will consider whether those who are, or were previously directors of the company may have caused detriment to those owed money, including workers and businesses affected.
A spokesperson for the Insolvency Service said: “Any bonus payment to directors, beyond the liquidation date, have been stopped and this includes the severance payments which were being paid to some senior executives who left the company.”
Clark has also written to the chairman of the Financial Reporting Council, Sir Win Bischoff, and asked it to conduct an investigation into the preparation of Carillion’s accounts past and present, as well as the company’s auditors.
Clark said: “It is important we quickly get the full picture of the events which caused Carillion to enter liquidation.”
Carillion held around 450 contracts with the government, representing 38 percent of its 2016 reported revenue. Therefore, the government announced it will provide the necessary funding required by the Official Receiver to maintain public services.
The Insolvency Service has also contacted all of Carillion’s private sector service customers, 90 percent of which have confirmed they wish to continue with current arrangements.
What we know so far
Employees of Carillion have been told by the government and PwC to continue to turn up for work as normal and that they will still be paid.
The government has also pledged to continue the funding for apprentices working for Carillion and has transferred these individuals to continue their learning with the Construction Industry Training Board.
Previous employees of the company already receiving a Carillion pension will continue to do so. However, PwC said that the 270,000 employees using Carillion’s defined benefit scheme are likely to go into the Pension Protection Fund.
Clark, along with the Economic Secretary to the Treasury John Glen, and Small Business Minister Andrew Griffiths, met with banks this week to seek assurance that they will support the small businesses affected by Carillion’s liquidation.
The banks in attendance included Barclays, HSBC, Lloyds, RBS, Santander, Shawbrook, and Aldermore - as well as the British Business Bank.
The banks assured the government that they are in contact with customers impacted, and have in place the advice and support needed and that any individual cases are escalated and dealt with sympathetically, swiftly and appropriately.
The government has also instructed creditors that haven’t been paid for goods or services supplied to Carillion to register their details with the government to claim back funds.
However, accountancy firm UHY Hacker Young has estimated, using calculations based on insolvency law, that Carillion can only be expected to pay creditors less than 1p for every £1 they are owed.
Peter Kubik, partner at accountancy firm UHY Hacker Young, said: “A prescribed £600,000 will be spread extremely thinly amongst trade creditors who are owed more than £100m in total.”