The Financial Fallout of Carillion’s Collapse Is Growing at an Alarming Rate

The scramble to control the aftershock of the crisis continues as it emerges the firm’s total financial obligations were about £5bn.

Cross-posted from Sky News

Carillion, the bankrupt construction group, had financial liabilities worth about £5bn when it went bust this week, according to the most extreme calculation of its obligations to tens of thousands of pension scheme members.

Sky News can reveal that private analysis of Carillion’s pension deficit on a Section 75 – or full buyout – basis has concluded that it was as high as £2.6bn, a far higher sum than the £587m accounting deficit referred to by its former chief executive in a High Court witness statement.

The £2.6bn figure relates to the cost to Carillion of paying an insurance company to guarantee all of its pension liabilities, and is significant because it is likely to be the sum claimed on behalf of the pension schemes as part of the liquidation process, according to insiders.

Sources said the full buyout deficit was also relevant because added to Carillion’s other debts, including those owed to its banks, it takes Carillion’s total financial obligations when it collapsed to roughly £5bn.

The vast scale of the company’s total indebtedness further dwarfs its comparatively minuscule market capitalisation of just £61m when the Official Receiver was called in on Monday morning.

Although the pension schemes will lodge a claim for £2.6bn with the liquidator, there is no prospect of that money being paid, since Carillion failed with just £29m on its balance sheet

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