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In the Wake of Carillion Collapse Construction Insolvencies Soar | BUILDING MAGAZINE

In the Wake of Carillion Collapse Construction Insolvencies Soar

According to accountant Moore Stephens following Carillion’s failure in January around 780 Construction Companies failed in the first three months of 2018 being an increase of 20% on the same three months a year ago.  According to figures from the government’s insolvency service there were 2,764 insolvencies among building firms in the 2017/2018 financial year, up by 6% on the previous 12 months.

Lee Causer, partner at Moore Stephens, said “The collapse of Carillion sent shockwaves through the construction sector, and we are seeing more insolvencies as a direct result.  “Large construction companies are infamous for squeezing the profit margins of the contractors and subcontractors who work for them..These contractors often cannot negotiate against the terms set for them by their larger clients”. He said SMEs and specialist subcontractors had been hit particularly hard by Carillion’s fall” as many of these companies would have been heavily relying on the construction giant for large amounts of their past, current and future workload.

Causer said “It is likely that these subcontractors would have had to write off virtually everything owed to them by Carillion.

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