Finance

Litigation funder LCM backs £250m Carillion claim against KPMG

Litigation funder Litigation Capital Management has agreed to back a £250m claim against KPMG from creditors of collapsed outsourcer Carillion.

LCM will provide a finance facility for Carillion entities in liquidation to fund a lawsuits in the Commercial Court against the outsourcer’s former auditors KPMG.

KPMG was contacted for comment.

READ Audit sector failures mean more Carillion-style collapses likely, says think tank

Construction firm Carillion went bust in 2018, despite having received a clean bill of health from KPMG. It had nearly £7bn in liabilities when it fell into liquidation.

The claim is being brought by the official receiver, a court-appointed civil servant overseeing the liquidation of Carillion. On a day-to-day basis the claim process is being managed by consultancy PwC, many of whose partners have been appointed as special managers for the Carillion entities in liquidation.

KPMG is also facing potential regulatory action over the collapse of Carillion, with the results of a probe into its auditing by the Financial Reporting Council expected imminently.

READ KPMG faces £6m lawsuit over tax advice to property firm

Litigation funders provide financial backing for lawsuits in exchange for a proportion of any settlement or damages.

Some operate on a no-win, no-fee basis, so they can also be on the hook for costs if a suit is unsuccessful.

Patrick Moloney, chief executive of LCM, said: “LCM has long and deep experience in funding insolvency related disputes. As such, LCM is extremely well placed to tailor a finance package to pursue these claims.”

To contact the author of this story with feedback or news, email James Booth

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