Businesses guaranteed essential supplies during rescue

Summary of Responses to Consultation - February 2015

In its Summary of Responses to the Consultation on the Continuity of Essential Supplies, the Government has announced that the supply of IT and utility services to businesses undergoing insolvency rescue will be guaranteed.

Suppliers of IT, water, gas, electricity and communications services guaranteed payment for services supplied during the rescue period will also be able to ask for personal payment guarantees from the insolvency practitioner.

These changes will be subject to Parliamentary scrutiny before coming into force in October 2015.

The Enterprise and Regulatory Reform Act 2013

The Enterprise and Regulatory Reform Act 2013 brought in new powers to help insolvency practitioners secure essential IT and utility supplies needed to keep a business going while it undergoes the rescue process. By turning around struggling but viable businesses, jobs can be saved and creditors stand a better chance of recovering some of what they are owed.

The government's plans will mean suppliers are prevented from terminating a supply or increasing charges as a result of insolvency. To safeguard suppliers:

  • the supplier will be able to seek a personal guarantee from the insolvency practitioner at any time to give them more certainty that the supplies will be paid for
  • the supplier will be able to apply to court to terminate their contract on the grounds of 'hardship'
  • insolvency practitioners will be issued guidance to urge them to make contact with essential suppliers at the earliest possible time following their appointment to discuss their needs in relation to supply

Relevant Articles
Area of Interest