Too big to fail: business insolvency measures for energy firms

Published on May 3, 2013 by Crawfords Accounting

Special business insolvency measures have been proposed by the UK government, in the event of a major energy supplier entering administration.

The Department of Energy and Climate Change has described such an occurrence as being of low likelihood, but high potential impact.

In order to mitigate the risks to consumers, DECC has proposed that energy supply companies that enter into business insolvency proceedings should be given assistance to allow them to continue trading, so that there is no chance of customers being cut off, or of other firms’ financial stability being threatened.

However, that does not mean that energy companies cannot also consider conventional corporate insolvency processes – and those that opt for such arrangements should not face having their customer base taken away from them.

Corporate insolvency in the energy sector is not only a concern for customers; it can also be difficult to achieve corporate recovery, once a supplier has entered into administration.

That is because the regulator has the power to appoint a Supplier of Last Resort, effectively handing away the troubled supplier’s customer base; and this is something specialist administration advice will always work hard to prevent from happening.


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