Supply chain firms affected by the collapse of Carillion are to receive just £31 million from trade credit insurers to help them recover costs, according to the Association of British Insurers (ABI).

The UK's second biggest construction firm collapsed into administration earlier last week with around £1.5 billion of debts and leaving some 30,000 firms owed money.

Carillion is the latest number of high profile company collapses such as Monarch, Palmer & Harvey, Multiyork and Misco.


Trade credit insurance covers against the risk of not being paid for goods or services that businesses sell, which may arise as a result of insolvency, protracted default or political upheaval.

Mark Shepherd, Assistant Director, Head of Property, Commercial and Specialist Lines, at the ABI, said the firm's demise is a "powerful reminder of how trade credit insurance can be a lifeline for businesses".

"This insurance is an essential business tool that helps firms trade and expand in the UK and overseas," he said.

"For all businesses, large or small, bad debt could easily put their day-to-day operations at risk, threatening the jobs of their employees. One insolvency can risk a domino effect to hundreds of firms in the supply chain. Trade credit insurance is an essential resource that provides businesses with the confidence to trade, secure in the knowledge they are financially protected when insolvencies occur."

(LM/MH)