From 1 October this year, the Insolvency (Protection of Essential Supplies) Order will come into effect.
The Order aims to prevent suppliers of essential services, such as utilities, from using their services to negotiate an unfair advantage when a business enters administration or a voluntary arrangement.
Suppliers will not be able to withdraw their supply or demand additional payments in these circumstances. Instead, they can ask the appointed insolvency practitioner to guarantee payments of charges incurred after the start of the administration or voluntary arrangement as a condition of continuing to supply.
Alternatively, suppliers may apply to court for permission to terminate a contract on the grounds that if they continue it would cause them hardship. They also have the right to terminate the contract if post-insolvency supplies are not paid for within 28 days of being due. Both of these conditions apply to contracts entered into on or after 1 October 2015.
This Order will also give the same protection to supplies of IT related goods and services in an insolvency that supplies of gas, electricity, water and telecommunications already have.
For more information about this or any other Insolvency matter, please contact our Insolvency team on 0115 9888 777.