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The Insolvency (Protection of Essential Supplies) Order 2015, SI 2015/989 (I(PES)O 2015) was made on 26 March 2015, and will in accordance with article 1(1) come into force on 1 October 2015. The purpose of I(PES)O 2015 is stated in its explanatory memorandum to:
When a company or an individual enters into an insolvency process, suppliers of gas, electricity and water are unable to demand payment of any outstanding charges as a condition of continuing to supply that company or individual. This is particularly important where there is a business that can be rescued, with the prospects of rescue being hindered or altogether being removed if the company or individual can effectively be held to ransom. That position has existed for a long time, which has meant that the law is out of date when it comes to other supplies which are essential to the functioning of a business and which have only become prevalent over the past few years—principally supplies of IT products and services.
Such is the importance of IT supplies to most businesses today that insolvency practitioners reported increasing instances where IT suppliers were exercising commercial leverage over insolvent companies and individuals for continued supply, risking a potential rescue of the business to the detriment of creditors as a whole.
By section 92 of the Enterprise and Regulatory Reform Act 2013 (ERRA 2013), which came into force on 25 April 2013, the Secretary of State was given the power to amend by order section 233 of the Insolvency Act 1986 (IA 1986) for corporate insolvency and IA 1986, s 372 for personal insolvency to:
The ERRA 2013, ss 93–95 also gave the power to the Secretary of State to make orders rendering void contractual terms in contracts for the supply of essential goods and services that allow the supplier to either terminate the contract or seek to vary its terms where the customer enters into a voluntary arrangement (companies or individuals) or administration (companies).
The provisions of the I(PESO) 2015 and the amendments it makes to legislation can be summarised as follows:
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