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Insolvent Businesses in UK to be Guaranteed Supply of Utilities

Posted by on in Commercial Litigation
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The UK Government has this week, laid before Parliament, proposals, which if approved, will ensure insolvent businesses continue to be supplied services deemed to be "essential" – such as IT, telecoms and other utilities services, while insolvency practitioners seeks a solution.

The suppliers of such 'essential' services will not be able to simply cut off supply, nor charge premium rates to, any businesses undergoing rescue.

It is not all bad news for said suppliers as they will be guaranteed payment ahead of other creditors owed sums for services supplied during the rescue period. Crucially, said suppliers, will also to be request personal guarantees of payment from insolvency practitioners.

The proposals also allow for suppliers to make an application to court in order to terminate their contract based on 'hardship'.

If approved, the proposals will come into force in October 2015.

Commenting on the development, Business Minister, Jo Swinson said:

"These changes will help struggling businesses during rescue while providing confidence for the suppliers that they will be paid for the essential services they provide."

In addition, R3, President, Giles Frampton, stated:

"The changes are a good example of the adaptability of the UK insolvency regime. Some have called for the wholesale introduction of a US Chapter 11-style regime, but the truth is we can incorporate the best parts of Chapter 11, like these proposals, into existing legislation."

"Over time, we would like to see more types of suppliers added to the list of those prevented from trying to steal a march on other creditors and take advantage of their importance to struggling businesses. It will also be important to review the impact of the requirement for Office Holders to give a personal guarantee to suppliers."

Contact Us – UK Business Insolvency Litigation Claims

Whether you wish to commence legal proceedings or challenge those that are being brought against you, our specialist insolvency team can guide you through the procedures. Further, if are worried about the costs involved, Advantage Litigation Services have the skills and expertise to help you find a way of funding commercial litigation without risking your personal finances or those of your business. Click here to contact us today or call 0800 160 1298 to see how we can help.

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