Carillion
Carillion plc was the United Kingdom’s second-largest construction company and a major public-services contractor, holding around 450 government contracts. It entered compulsory liquidation on 15 January 2018 owing close to £7 billion with only £29 million in cash. It is the single most important documented case in this vault of Contractor Insolvency and Subcontractor Risk: a top-tier contractor whose failure cascaded down the entire Construction Payment Pyramid at once.
Carillion [relates] Contractor Insolvency and Subcontractor Risk Carillion [part-of] United Kingdom
Carillion owed roughly £2 billion to about 30,000 suppliers, subcontractors and short-term creditors. Its treatment of subcontractors before collapse is itself central evidence: a UK parliamentary committee found Carillion “used its suppliers to prop up [a] failing business model”, making them wait 120 days or more for payment — even while Carillion was a signatory to the Government’s voluntary Prompt Payment Code. It used an “Early Payment Facility” (a reverse-factoring arrangement with banks) that ratings agencies said concealed its true borrowing. The case shows that voluntary payment codes and slow-payment behaviour are leading indicators of insolvency risk, not separate problems.
Carillion [caused_insolvency_risk] Global Subcontractor Payment Delays Carillion [contradicts] Prompt Payment Code
The consequences for subcontractors were severe and unequal. The UK Government guaranteed payment for subcontractors on public-sector projects, but suppliers on private-sector contracts were ranked as ordinary unsecured creditors — meaning hundreds of firms that had already waited up to six months for payment faced receiving nothing. The Specialist Engineering Contractors’ Group estimated retentions held by Carillion could be as high as £1 billion, and warned of “catastrophic losses for thousands of SMEs”. Documented knock-on failures included subcontractors Vaughan Engineering (which itself collapsed owing £9.2m) and Aspin Group. Seven years on, in September 2025, administrators reported that 60 of Carillion’s 84 companies could not pay unsecured creditors at all.
Carillion [relates] Construction Retention Payments
Carillion is the empirical proof of the vault’s worst-case scenario: it demonstrates that retentions are routinely lost on insolvency, that subcontractor unsecured-creditor status offers almost no recovery, and that public/private creditor treatment can differ starkly. Its collapse directly fuelled the UK reform momentum that produced the UK Late Payment Reform 2026 retention-ban proposal.
Carillion [precedes] UK Late Payment Reform 2026
Connections
- Contractor Insolvency and Subcontractor Risk — Carillion is the canonical example, source: 2018
- United Kingdom — jurisdiction of the collapse, source: 2018
- Construction Retention Payments — up to £1bn in retentions lost, source: 2018
- Prompt Payment Code — Carillion was a signatory yet paid at 120+ days, source: 2018
- UK Late Payment Reform 2026 — reform partly driven by the Carillion collapse, source: 2026