Freshfields is acting for the official receiver
One of the largest UK insolvencies for years, the collapse of construction giant Carillion is poised to have a wide-ranging impact on a number of industries, not least among the most prominent restructuring and insolvency advisers in the City.
As Britain’s second-largest construction company went bust on 15 January, Freshfields Bruckhaus Deringer and Dentons landed substantial roles advising on the liquidation, while Slaughter and May saw its relationship with one of its most prominent long-term clients come to an end.
Freshfields was called in to act for the liquidator, the official receiver, led by restructuring partner Adam Gallagher and partners Ken Baird, Ryan Beckwith, Craig Montgomery and Neil Golding.
An officer appointed by the Insolvency Service, the official receiver, also turned to Dentons restructuring partners Nigel Barnett and Neil Griffiths. Freshfields and Dentons are also advising PwC as the court-approved manager of the liquidation. ‘How big a job the insolvency mandate is for legal advisers depends on how quickly you can sell the business and how much litigation there is around the rump of the business,’ observed a City banking partner.
For Slaughters, the collapse of the Wolverhampton-headquartered company, with an annual turnover of around £5bn, spelled the end for a client whose relationship with the firm dates back over 15 years. It had most recently acted for the company during emergency talks with lenders and the government in the days leading up to the collapse. Corporate finance partner William Underhill and head of restructuring and insolvency Ian Johnson had worked on the mandate, along with restructuring partner Tom Vickers and corporate partner Sally Wokes. The talks failed to reach a deal on the company’s £1.5bn liabilities, including £900m of debt.
Clifford Chance (CC) and Linklaters have been advising Carillion’s lenders, with CC restructuring partner David Towers representing the main banks – Barclays, The Royal Bank of Scotland and HSBC – and Linklaters insolvency expert Nick Le Masurier acting for the Schuldschein lenders. Akin Gump Strauss Hauer & Feld has acted for private placement noteholders, fielding a team under London restructuring partner Barry Russell. Willkie Farr & Gallagher has represented the convertible bondholders, led by restructuring partner Graham Lane.
Carillion’s collapse has raised questions over the future of its 43,000 staff – 20,000 of them in the UK – as well as the numerous projects the company was working on: not just the development of the HS2 railway but also the management of 50,000 homes for the Ministry of Defence and around 900 school buildings.
With the company outsourcing most of its work to subcontractors, the collapse has affected a number of smaller construction firms. Meanwhile, the Pension Protection Fund (PPF) has stepped in to bail out Carillion’s pension funds, which have a deficit of £587m. The company had 14 pension schemes with 28,000 members – the biggest single claim yet on the PPF.
Specialist boutique Sacker & Partners has been advising Carillion’s pension trustees, along with PwC and Freshfields.