After months of speculation, the worst has come to pass - Carillion, the UK's second largest construction company, is to be liquidated having amassed a staggering £1.5Bn of debt.
Despite last minute talks between Carillion, its lenders and the UK Government, no deal could be reached, leaving the beleaguered firm with little option than to begin insolvency proceedings. The Official Receiver has since been appointed liquidator, with partners at PwC acting as Special Managers.
In the interim, the Government will put forward the funding required by the Official Receiver to maintain all public sector services provided by the construction, facilities management and maintenance specialist - among them homes, schools and prisons.
"It is regrettable that Carillion has not been able to find suitable financing options with its lenders but taxpayers cannot be expected to bail out a private sector company," said David Lidington, Minister for the Cabinet Office.
"Since profit warnings were first issued in July, the Government has been closely monitoring the situation and has been in constructive discussion with Carillion while it sought to refinance its business. We remained hopeful that a solution could be found while putting robust contingency plans in place to prepare for every eventuality.
"It is of course disappointing that Carillion has become insolvent, but our primary responsibility has always been keep our essential public services running safely."
The issue goes beyond public sector services however. Despite assurances from the Government, there's obvious concern for Carillion's workforce, which numbers in the thousands, not to mention the wider supply chain.
According to Brian Berry, Chief Executive of the Federation of Master Builders: “Carillion’s liquidation is terrible news for all those who work for the company and it will have serious knock-on effects for the many smaller firms in its supply chain, some of which will be in serious financial danger as a result of Carillion’s demise.”
But Minister Lidington urged calm, adding: "We understand that some members of the public will be concerned by recent news reports. For clarity - all employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do."