RE: List of cases currently being litigated3 Sep 2021 00:34
looks like Carillion claim size could increase to ~£2 Billy...
are we on a profit share for this one? Sounds like a potential company maker,
ACCOUNTANCY
KPMG could face £2bn legal claim over Carillion collapse
The estimates of the potential fallout come as KPMG has been told to appear before a disciplinary tribunal over 'false' information claims
The construction firm Carillion went bust in 2018, despite having received a clean bill of health from its auditor KPMG. It had nearly 7bn in liabilities when it fell into liquidation AFP/Getty Images
By James Booth
Wednesday September 1, 2021 12:57 pm
KPMG could face a legal claim of up to £2bn from the liquidator of collapsed outsourcer Carillion.
Representatives of the official receiver, part of the Insolvency Service, delivered a letter before action to KPMG in June setting out the potential claim. A response from the Big Four firm is expected this month, according to people familiar with the matter.
The letter before action said the value of the negligence claim was likely to range between £250m and more than £1bn, a person familiar with the matter said.
A second person familiar with the matter said the value of the claim could range from £1bn to £2bn.
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A spokesperson for KPMG declined to comment.
Construction firm Carillion went bust in 2018, despite having received a clean bill of health from its auditor KPMG. It had nearly £7bn in liabilities when it fell into liquidation.
The claim against KPMG is likely to be filed with the Commercial Court before the end of the year, according to two people familiar with the matter.
Previously it has been reported that the claim against KPMG was likely to be £250m, but a person familiar with the matter said that number represented “low hanging fruit”.
The lower figure consists of dividends the official receiver will say were wrongly paid out by Carillion in advance of its collapse because of KPMG’s negligence and advisory fees charged by KPMG, the person said.
READ Litigation funder LCM backs £250m Carillion claim against KPMG
The larger figure includes a wider range of losses incurred by Carillion which could be attributed to negligence by its auditor, they added.
The likely increased value of the claim is also attributable to an 18 June Supreme Court ruling in Manchester Building Society v Grant Thornton which expanded the scope of damages in professional negligence claims, a second person familiar with the matter said.
In that case, the Supreme Court said audit firm Grant Thornton must pay Manchester Building Society £13.4m damages after it had incorrectly advised that hedge accounting could be applied to reduce the volatility of interest rate swaps in its accounts.
Lawyers say that the judgment may expand the losses claimants are able to recover in professional negligence cases.
“It may mean that claimants, in som
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