This is an extract of our Directors Duties And Corporate Governance document, which we sell as part of our Debt Restructuring Notes collection written by the top tier of King's College London students.
The following is a more accessble plain text extract of the PDF sample above, taken from our Debt Restructuring Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
● An introduction to directors' duties in the UK
● Zooming in on directors' duties in the area of corporate insolvency
● Recent high-profile failures: BHS and Carillion
○ Carillion plc: A large listed company with extensive overseas operations. It was involved extensively with the government via public-private partnerships.
■ What happened?
■ Who was to blame?
■ What are the lessons learnt?
■ A need for reform?
○ British Home Stores: A large privately-owned UK retailers.
● Government Reform: Corporate Governance 2019
● Key facts and timing:
○ The second-largest construction company in the UK as of 2017.
○ A plc with a complex group of subsidiaries.
■ It acquired several rivals in the sector (and with it their pension fund deficits).
○ 2016 accounts published on 2 March 2017: Everything seemed fine.
○ 10 July 2017: A £845 million provision was announced, and share price fell by 70% in response.
○ September 2017: A further £200 million provision announced, leaving it with net liabilities.
○ Not "too big to fail": Request for government assistance unsuccessful.
○ January 2018: Compulsory liquidation.
● Compulsory liquidation:
○ Carillion entered compulsory liquidation with PwC as special managers rather than administration, though it was clear that administration was preferable.
■ This is because none of the big-4 accountants were willing to take on the office of administrator.
■ Being administrator meant taking on part of Carillion's employees and contracts. The exposure that this created was simply too large.
○ Liabilities exceeding £2 billion with less than £30 million in the bank.
● The Department for Business, Energy, and Industrial Strategy ("BEIS") report:
○ The report highlighted a lack of meaningful competition in the statutory audit market and recommended referring the case to the Competition And
Markets Authority ("CMA").
○ Carillion's directors were criticised
○ Carillion's professional advisors were also criticised.
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