Troubled construction firm Carillion has been forced to enter liquidation after unsuccessful rescue talks with the government and lenders over the weekend.
The company filed for a compulsory liquidation this morning, and it said the government will provide the funding required by the official receiver, or the liquidator, to maintain existing public services contracts.
PwC is expected to be appointed by the High Court as special managers to act on behalf of the official receiver.
Carillion employs 43,000 people, nearly 20,000 of which are in the UK. It is not yet clear how the firm's staff will be affected. It provides services in defence, education, health and transport, and has a number of high-profile contracts, including the high-speed rail HS2.
The Financial Conduct Authority announced it would temporarily suspend trading in Carillion's shares.
Sad day for Carillion
Philip Green, the chairman of Carillion, said: “This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.
"Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.
"In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision."
Carillion has been struggling under the weight of its £1.5bn debt pile, including a £587m pension deficit, and a £300m cash hole.
Unions hit out
Mick Cash, the general secretary of the RMT union called for the protection of jobs and pensions and said the collapse of Carillion was "disastrous news".
"RMT will be demanding urgent meetings with Network Rail and the train companies today with the objective of protecting our members jobs and pensions.
"The infrastructure and support works must be immediately taken in house with the workforce protected," he said.
Unite, the UK's largest union, called for a probe into the firm's collapse.
"There has to be an urgent inquiry into how a company that loaded itself with debt, which undercut competitors with unsustainable bids, which hoovered up vats of public money, and that had repeatedly alerted the government to its own financial shortcomings got its hands on so much of the public sector and taxpayers' cash," said Jim Kennedy, Unite's national officer for local government.
He added Unite was "very concerned" about the impact Carillion's collapse would have on the wider supply chain.
"Many of these small firms are the lifeblood of their community but their exposure to Carillion's debt puts them at serious risk," Kennedy said.
Government ensures Carillion's services will continue
Cabinet office minister David Lidington, said contingency plans had been drawn up to ensure that services provided by Carillion will continue.
“Ever since the profit warnings were announced during the course of last year, various government departments that have had business with Carillion have been drawing up contingency plans about how they might respond,” Lidington said in a BBC interview.
He said joint venture arrangements would allow Carillion's partners to take over some projects and going forwards "some services will be taken in house, some will go out to alternative providers in a managed, organised fashion".