163. From the tone of the letter sent to the Government on 13 January, it appears that the Carillion board expected the Government to provide the necessary guarantees to keep the company afloat. It states that "to date, the board has been able to conclude that, for so long as key stakeholders (including HM Government) continue to engage meaningfully in relation to the provision of short term funding and a longer term restructuring, it is appropriate to continue".477 We do not have information on the substance of the conversations between the board and Cabinet Office officials during the preceding weeks, but it is difficult to believe that the Government would have given an indication that Carillion could expect long-term support, given the clear policy on private sector bailouts enunciated by the Minister. It must have been clear by the end of December, if not much earlier, that an injection of capital from another source was out of the question. Without Government support, insolvency or liquidation must have seemed inevitable. This calls into question whether the board was engaged in wrongful trading.
164. Under insolvency law, a director may be guilty of wrongful trading if they knew, or ought to have known, that there was "no realistic prospect" of the company avoiding liquidation or administration.478 Once an insolvency process becomes inevitable, directors are obliged to seek to minimise the loss to the company's creditors. By January 2018, if not before, it must have been clear to the board that only a bailout from Government could save the company. It is of course up to the courts to determine, following any application from the liquidator, whether any offence was committed, and in respect of what period. Given that, as far as we know, no indications had been given that a bailout would be forthcoming, and that the board apparently took no steps to minimise the potential loss to creditors, there must at least be a question as to whether individual directors could reasonably be accused of wrongful trading.
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477 Letter from Philip Green to Permanent Secretary to the Cabinet Office, 13 January 2018
478 Insolvency Act 1986, sections 214(2) and 246ZB(2)