Carillion subsidiary closed by Royal Court

Babbe dispute resolution partner Todd McGuffin, an insolvency and insurance expert, assisted by associate Bryan Little, represented the directors of Carillion Insurance Company Ltd.

Its parent, the Carillion group, a British multinational facilities management and construction services company, was placed into compulsory liquidation by the English High Court in January with reported debts of £1.3bn and pension liabilities of £587m.

The captive had been in a ‘run-off’ phase of operation – a winding down process – but it was subject to an upstream loan to Carillion Construction which, following profit warnings issued by the Carillion group, was determined by the directors to be unrecoverable.

The court accepted that a nil value should be applied to the loan and, as a result, the company failed to comply with the Guernsey regulator’s capital and solvency requirements. The court recognised that these circumstances were down to the insolvency of the parent and not due to the directorship or management of the company.

Nicholas Vermeulen and Christian van den Berg of PricewaterhouseCoopers CI LLP were appointed joint liquidators.

Advocate McGuffin said: ‘The application served as an example of the great skill and experience of the directors in exercising their judgement as to the appropriate treatment of the assets when determining regulatory solvency requirements.’