UK-based construction firm, Carillion, has gone into compulsory liquidation, putting tens of thousands of jobs at risk, said a report.
The company is involved in a host of major UK government projects such as HS2 ( new high-speed rail network, from London to Birmingham and to Manchester and Leeds), as well as vital public services including school dinners, reported The Guardian.
The Carillion decision came after the last-ditch talks by the companys bank lenders during the weekend collapsed. The emergency talks were hosted by the Cabinet Office, it stated.
In a statement to the London Stock Exchange, Carillion said: Despite considerable efforts, those discussions have not been successful, and the board of Carillion has therefore concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect.
An application was made to the high court for a compulsory liquidation of Carillion before the opening of business on Monday and an order has been granted to appoint the official receiver as the liquidator, said the report.
The accountancy firm PricewaterhouseCoopers (PwC) is likely to be named as special manager to act on behalf of the official receiver and handle the collapse of Carillion, which employs 43,000 people worldwide, including nearly 20,000 in the UK.
Carillion said the government would provide funding necessary to maintain the public services carried out by its staff, subcontractors and suppliers, reported The Guardian. The government has urged workers to go to work as usual and promised them they would be paid via the official receiver.
Philip Green, the companys chairman, said: This is a very sad day for Carillion, for our colleagues, suppliers, and customers that we have been proud to serve over many years. Over recent months, huge efforts have been made to restructure Carillion to deliver its sustainable future. In recent days, however, we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.
The firm is involved in many public infrastructure projects from transport and health to education and defence and provides other vital public services such as cleaning and catering in NHS hospitals, the provision of school dinners in nearly 900 schools and prison maintenance. Carillion ran into financial difficulties last year after issuing three profit warnings in five months and writing down more than £1bn from the value of contracts.
The firm boasted key operations in the Middle East region besides a joint venture with UAE conglomerate Al Futtaim. In March 2017, Al Futtaim Carillion won an AED2.2bn contract to build the three main Theme Districts at the Dubai Expo 2020 site.
Al Futtaim Carillion could not be reached for comment when contacted by Construction Business News.