Life is full of those “Where were you?” moments from the death of Princess Diana to the fall of the Berlin Wall. Insolvency is similar with the announcement of big companies entering into insolvency and one of the most recent was Carillion in January 2018 (This writer was at a breakfast in the Premier Inn, Leeds City Centre when the news broke).
The Carillion story took its latest twist over the weekend with the news the company’s former auditors, KPMG, had reached an undisclosed settlement against the £1.3bn lawsuit launched by the Official Receiver. The claim focused on audits between 2014 and 2016 and alleged KPMG did not spot various “red flags” as it audited Carillion’s accounts. The firm was paid £29m to audit Carillion over 19 years and signed off the final audit nine months before the liquidation.
When the claim was issued, KPMG said that Carillion’s board and management were solely responsible for the failure as they set the strategy and ran operations and that the lawsuit was “without merit”. KPMG’s have now issued a statement saying: “I am pleased that we have been able to resolve this claim. Carillion was an extreme and serious corporate failure, and it is important that we all learn the lessons from its collapse”. When you consider KPMG were also fined £14.4 million by the regulatory body on this matter, these are wise words that ought to be considered by all advisors.
However, the lessons apply not just to professional advisors but to directors as well. Missing the early warning signs or “red flags” can result in an increased risk of financial problems. At PBC we strongly encourage directors of companies in or facing financial distress to take advice at an early stage.
If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 or email to firstname.lastname@example.org. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.