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Leeds council calls in bank bond to deal with contract left unfinished after Carillion collapse

Leeds City Council has this week decided to call in contingency plans to deal with the recent collapse of construction giant Carillion, who has left a contract it was delivering for the authority unfinished.

The council awarded the contract for the Leeds city centre cycle Superhighway City Connect 2 (phase 1) to Carillion in October.

However, at the time, the award was subject to receiving an ‘On Demand Bond’ from HSBC that would protect the public purse in the case that Carillion goes into liquidation.

“As part of the original contract for work on the Superhighway City Connect contract we made sure that public funds were protected by making it a condition that a bond was woven into the Carillion contract in the event of the contractor becoming insolvent,” said Leeds City Council chief executive, Tom Riordan.

“Consequently we are in contact with the bank, HSBC, who provided the bond to confirm that Leeds City Council are calling-in the payment of the guarantee.”

Riordan added that Leeds was contacting the official receiver to let them know that as Carillion has had a winding up order made against it, the city council was terminating the contract with the company.

“The council is arranging to use our own staff and subcontractors to make the site safe and do any necessary work so the highway can be reopened,” he concluded.

The news also follows Oxfordshire County Council agreeing a deal to terminate its own contract with Carillion this week.


Stephen CD Carter   26/01/2018 at 12:00

Excellent Risk Management and Contingency Planning by someone. It would have been so very easy to say "Carrillion is too big to fail" and not bother with the offset.

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