Suppliers could be prevented from terminating services to insolvent firms

Suppliers could be prevented from terminating services to insolvent firms

The government has announced a number of proposals on how to ensure the continuous supply of essential services, including telecommunications and IT, to insolvent businesses and individuals.

The consultation could lead to service suppliers being unable to terminate contracts following an insolvency or putting conditions in place for continuing supply to customers experiencing financial difficulties.

Business minister Jo Swinson announced the series of proposals to help insolvent businesses and individuals.

The UK's current insolvency law allows a number of suppliers to seek a personal guarantee before continuing to supply services to an insolvent firm. However, it does not allow the companies to demand payment of existing debts for continued supply; proposed changes would also cover IT suppliers and on-sellers of utilities - not presently covered by the law.

The proposals also include new legislation to cancel contractual terms that allow suppliers to withdraw services to an insolvent company - whether it has already entered administration or has an arrangement under the 1986 Insolvency Act approved.

'These proposals are good news for employees of insolvent businesses, creditors and insolvency practitioners who are trying to rescue ailing companies,' said the minister.

She said that businesses are closing down because insolvency practitioners are unable to secure the essential supplies they need to 'deliver the best outcome' for creditors and employees.

'I look forward to hearing the views of all interested parties to ensure that the right balance is struck when implementing these changes,' she added.

The consultation will close on October 8.


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