UK's second biggest construction company collapses


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Large construction company Carillion has collapsed after talks between the firm, its lenders and the UK government failed to reach a deal to save the company.

Carillion is the second biggest supplier of maintenance services to Network Rail, maintains 50,000 homes for the Ministry of Defence and is involved in major projects such as the HS2 – a planned high-speed railway network connecting major UK cities. But it owes around £1 billion ($1.4bn).

The company’s liquidation means the government will have to find funds for services provided by Carillion, such as cleaning and catering. Some contracts will be taken up by government and some given to other contractors, but government minister David Lidington stressed that employees should continue as normal and would be paid. However, companies working for Carillion on purely private sector deals will only have two days of government support, Lidington said.

Lidington also defended the government’s decision not to bail out the company and said there were contingency plans in place (The Guardian.) The UK’s opposition – Labour Party – and the Liberal Democrats called for an investigation into the government’s dealings with Carillion. Carillion was awarded £1.3 billion ($1.8 billion) worth of government contracts since the company issued its first profit warning in July.

Carillion also has international contracts, such as five schools in Ireland, noted by news website The Journal. Carillion employs 20,000 people in the UK and a total of 43,000 worldwide.

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