Carillion's North East firms urged to seek "professional advice" following liquidation
Carillion subcontractors of the North East are being urged to seek professional advice at a very early stage in order to help safeguard their futures.
Along with other small regional businesses, Carillion has been advised to seek out help in the wake of the company’s collapse.
Neil Harrold, chair of insolvency and restructuring trade body, R3, is advising firms that are owed money to assess what impact Carillion’s liquidation will have on their business.
Subcontractors and suppliers are usually classed as unsecured creditors, and come behind secured creditors, such as banks, and employees in the queue for payment.
Such firms are being told to contact Carillion’s liquidator for information on their specific cases.
Harrold said: “For subcontractors awaiting payment for work carried out, there will be an immediate impact on cash flow.
“They will of course still be expected to pay any outstanding labour or materials costs for the work they have incurred or purchased and make VAT payments due to the crown authorities, which may in some cases include their invoices to Carillion.
“But also in the period ahead, there will also be an impact on their balance sheet. Bad debts and work in progress may have to be written down, weakening the balance sheet strength.”
Harrold went on to say that, even if there isn’t an immediate insolvency risk, this could affect a company’s credit rating which makes it even harder for them to raise finance or catch the opportunity to get work in the future.
Firms are being encouraged to take advice immediately and understand their best option to become secure again.