Carillion

Mnd

Mr_Curious wrote: »

I'll be following the events and updates throughout the coming days and weeks. I'm keen to understand what caused this situation.

Presumably he's interested in this topic and wants to find out more about it

Arklight

He is Mr Curious.

antrobus

Mr_Curious wrote: »

I'll be following the events and updates throughout the coming days and weeks. I'm keen to understand what caused this situation.

Carillion ran out of money.

The banks were not inclined to give them any more.

End of company.:)

Mr_Curious

The simple premise that a company ran out of money and couldn't function is the easy bit to understand. The nuances as to why are the bit that gets me.

This was not a new company being over ambitious, like can be seen with some of the smaller players in the energy market who have fallen by the wayside. This is/was a massive company. How was it allowed to happen? Why was it allowed to happen? Who is responsible and for what part of the mess? Who, if anyone, will be accountable? What are the knock on effects?

Answers on a postcard please Clifford

westernpromise

redmalc wrote: »

Why should the taxpayer be expected to bail out a company who paid a dividend to its shareholders only last year.

Quite.

They should be allowed to go bust. If they have underpriced government contracts they should be re-tendered and re-let. It may just be that there are too many providers of this sort of work in which case one or two need to go to the wall.

Thrugelmir

westernpromise wrote: »

If they have underpriced government contracts they should be re-tendered and re-let.

Carrilion operate overseas as well.

A story from October 2017.

Struggling contractor Carillion is locked in a £200m row over money owed on a project linked to the development of Qatar in preparation for the 2022 FIFA World Cup.

The cash-strapped firm has not been paid for almost a year for work on a $650m (£493m) contract handed to Carillion and joint venture partner Qatar Building Company in 2011, City A.M. can reveal.

The work forms part of the mammoth $5.5bn Msheireb Downtown redevelopment of central Doha, part of the infrastructure necessary to host the world’s biggest football tournament.

Top Carillion executives have been making monthly trips to Qatar in the hope of persuading Msheireb, backed by the Qatar Foundation, to stump up cash owed for work done.

http://www.cityam.com/274666/carillion-locked-gbp200m-row-over-contract-prepare-qatar

westernpromise

Twopints wrote: »

It's a big company for any one other company to take over - it has nearly 50,000 employees and a pension deficit of over half a £billion. It is in trouble for a reason - so why would another co. take over all of it? More likely some of the more profitable contracts will be picked up by a number of other companies rather than all going to one.

You let them go bust, so the losses are borne by those unwise enough to have lent them money (which they'll now lose) and those who own their shares (which will become presumably pretty much worthless or at least worth a lot less than before). Either the company's restructured, its debts are written off and some of the employees keep their jobs; or the 50,000 employees lose their jobs and get hired by competitors,

It's refreshing to see this happen. The three most epic public sector disasters in recent years have been Mid Staffs Workhouse, where thousands died in Dickensian squalor; the judicial murder by out-of-control police of Jean Charles de Menezes, and their ensuing lies; and the financial crash of 2008 due to Labour policy and utterly inept regulation. In all three cases, innocents suffered hideously, losing their livelihoods or indeed their lives, but because it was the fault of the sacred cow public sector, not one single public sector employee was put on trial or even sacked. So it's good to see some accountability.

antrobus

Mr_Curious wrote: »

The simple premise that a company ran out of money and couldn't function is the easy bit to understand. The nuances as to why are the bit that gets me. ....

If cash out exceeds cash in you eventually go bust. Nuances ae neither here nor there. KISS is what matters. (And I don't mean the rock group.)

They had three big public sector building contracts that ran into problems and generated big losses.

They had problems getting Qatar to pay. (See above.)

They were (allegedly) tendering for contracts at silly prices in order to get some cash flowing to try and keep things going.

Mr_Curious wrote: »

...
This was not a new company being over ambitious, like can be seen with some of the smaller players in the energy market who have fallen by the wayside. This is/was a massive company. How was it allowed to happen? Why was it allowed to happen? Who is responsible and for what part of the mess? Who, if anyone, will be accountable? What are the knock on effects?

It was an old (ish) company being over ambitious. Age is no guarantee of wisdom.

The answers to your questions would be;

We don't have a dictatorship of the proletariat; companies are allowed to go bust. (see note below)
Because we don't have a dictatorship of the proletariat.
The board of directors of Carillion PLC are responsible for 100% of the mess.
The board of directors of Carillion PLC.
Some suppliers to Carillion will also go bust.

Mr_Curious wrote: »

..
Answers on a postcard please Clifford

I'm not wasting the price of a stamp, when MSE is free.:)

Note: unless, of course, they are really important systemic banks that have been allowed to run riot by an inadequate supervisory regime. In which case you have no bl00dy choice.:)

antrobus

westernpromise wrote: »

You let them go bust, so the losses are borne by those unwise enough to have lent them money (which they'll now lose) and those who own their shares (which will become presumably pretty much worthless or at least worth a lot less than before). ...

The shares had already lost 90% odd of their value before today. They are now worth precisely nothing. They are pining for the fjords.

westernpromise wrote: »

....

Either the company's restructured, its debts are written off and some of the employees keep their jobs; or the 50,000 employees lose their jobs and get hired by competitors,

I doubt if there will be any restructuring. Carillion has gone into liquidation not administration. Some chap writing in the FT today stated that all it has is contracts; there are no meaningful assets, there is nothing to sell.

westernpromise wrote: »

....It's refreshing to see this happen.

Schumpeter's creative destruction. He got it from Marx, apparently.

westernpromise wrote: »

...
The three most epic public sector disasters in recent years have been Mid Staffs Workhouse, where thousands died in Dickensian squalor; the judicial murder by out-of-control police of Jean Charles de Menezes, and their ensuing lies; and the financial crash of 2008 due to Labour policy and utterly inept regulation. In all three cases, innocents suffered hideously, losing their livelihoods or indeed their lives, but because it was the fault of the sacred cow public sector, not one single public sector employee was put on trial or even sacked. So it's good to see some accountability.

Grenfell Tower. 71 dead. Human stupidity is endemic no matter what the economic model.

Tromking

Another private sector pension scheme bailed out by the taxpayers it seems.
We’ll have no more lectures about ‘gold plated’ public sector pensions please.