Bulb on the brink of collapse amid government negotiations with lender

Bulb on the brink of collapse amid government negotiations with lender

Bulb executives and their advisers have been working on an emergency sale of the company, with companies like Octopus Energy, Ovo Energy, Shell Energy Retail and Centrica, the owner of British Gas, expressing varying degrees of interest.

Energy provider Bulb is reportedly on the brink of collapse in the midst of last minute discussions between the government and its greatest tied down creditor. According to Sky News, Bulb is relied upon to delegate insolvency professionals quickly. The exact planning stayed indistinct because of the intricacy of the looming administration process and continuous discussions between the government and Sequoia Economic Infrastructure Income Fund, which has an extraordinary gotten advance of generally £50m to Bulb’s parent organization Simple Energy. Sky said Sequoia was perceived to have requested the reimbursement of its advance before Bulb being put into administration. A number of government departments and Ofgem, the industry controller, started speed up contingency plans from the collapse of Bulb last month.

The “challenger” energy company has also made a series of requests to the government in recent weeks to help it structure a rescue support package, but these have been rejected, according to another industry executive.

Talks about a solvent bailout deal have also faded, they said.

The disappearance of Bulb would mark, by far, the greatest insolvency of the crisis affecting the sector.

Bulb would be the largest company to collapse as a result of the crisis that surrounds the sector
Their customer base is almost as large overall as the approximately 20 suppliers that have collapsed over the past three months.

About 2 million households have seen their energy provider succumb to soaring wholesale prices since the beginning of September.

Bulb’s disappearance may put the jobs of the roughly 1,000 people who work for the company, which was launched in 2015 by Amit Gudka and Hayden Wood, at long-term risk, although most of its workforce will not be at risk. short term. term, as they will be asked to continue in their duties during the special administration.

A spokesperson for Bulb said: “We have decided to support Bulb in a special administration, which means that it will continue to operate without interruption of service or supply to members. “If you are a Bulb member, don’t worry, your power supply is secure and all credit balances are protected.”

It should be noted that the insolvency of Bulb will mean the first use of a resolution process called the Special Administration Regime (SAR), which would guarantee the financing of Bulb by the Treasury while the administrators seek a restructuring agreement, buyer or transfer of the base Of customers. That would mean hundreds of millions of pounds of taxpayer money would be used to fund Bulb’s obligations in the wholesale energy markets to ensure it can continue to operate.

Sky News revealed in september that Ofgem had hired Teneo Restructuring to oversee the insolvency of a large energy supplier, although it was unclear whether he or AlixPartners, Bulb’s restructuring advisor, would take over the administration. The largest supplier to collapse during the current crisis, Avro Energy, had around 580,000 clients.

Bulb has for some time been viewed as too big to go through Ofgem’s Provider of Last Resort (SOLR) process, the method by which all of the UK’s other collapsed energy companies have been solved in recent months. In the SOLR process, a company’s operating license is removed and offers from other industry players are sought for its customer base, and losses incurred by those customers’ acquirers are recovered through an industry tax. .

According to the SAR, the administrator has the legal obligation to consider the interest of the clients, unlike a conventional insolvency process where the main duty is towards the creditors. In a long-standing statement on his website about SAR, Ofgem said that a memorandum of understanding had been drawn up between him, the Treasury and BEIS, adding: “Provisions for this management scheme for energy providers were included in the Energy Law of 2011 “.

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