Bulb, Britain’s seventh-biggest energy supplier, is facing collapse within days amid eleventh-hour talks between the government and the company’s biggest secured creditor.
Sky News has learnt that the company, which launched in 2015 and has amassed 1.7 million customers, is expected to appoint insolvency practitioners imminently.
The precise timing remained unclear on Monday because of the complexity of the looming administration process and ongoing talks between the government and Sequoia Economic Infrastructure Income Fund, which has an outstanding secured loan of roughly £50m to Bulb’s parent company Simple Energy, according to industry sources.
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1:56
Why the energy price cap is ‘failing’ the UK
Sequoia is said to have demanded the repayment of its loan prior to Bulb being placed into administration, they added.
A range of government departments and Ofgem, the industry regulator, began accelerating contingency plans for the collapse of Bulb last month.
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Bulb executives and their advisors have been working on an emergency sale of the company, with the likes of Octopus Energy, Ovo Energy, Shell Energy Retail and Centrica, the owner of British Gas, expressing varying degrees of interest.
The ‘challenger’ energy company has also made a series of requests to the government in the last few weeks to help it structure a rescue support package, but these have been rejected, according to another industry executive.
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Talks about a solvent rescue deal have also faded, they said.
Bulb’s demise would mark by far the biggest insolvency of the crisis engulfing the sector.
Image: Bulb would be the biggest company to collapse as a result of the crisis engulfing the sector
Its customer base is nearly as large in aggregate as the roughly-20 suppliers which have collapsed during the last three months.
About 2 million households have seen their energy provider succumb to soaring wholesale prices since the start of September.
Bulb’s demise may place at long-term risk the jobs of the roughly-1000 people who work for the company, which was launched in 2015 by Amit Gudka and Hayden Wood, although the bulk of its workforce will not be at risk in the short-term as they will be required to continue in their roles during the special administration.
A Bulb spokesperson said: “We’ve decided to support Bulb being placed into special administration, which means it will continue to operate with no interruption of service or supply to members.
“If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected.”
Significantly, the insolvency of Bulb will entail the first use of a resolution process called a Special Administration Regime (SAR), which would guarantee funding for Bulb from the Treasury while administrators seek a restructuring deal, buyer or transfer of the customer base.
That would mean hundreds of millions of pounds of taxpayers’ money being used to fund Bulb’s obligations in the wholesale energy markets to ensure that it can continue operating.
Sky News revealed in September that Ofgem had lined up Teneo Restructuring to oversee the insolvency of a large energy supplier, although it was unclear whether it or AlixPartners, Bulb’s restructuring advisor, would handle the administration.
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Building resiliency into the UK energy market
The largest of the suppliers to collapse during the current crisis, Avro Energy, had about 580,000 customers.
Bulb has been regarded for some time as being too large to go through Ofgem’s Supplier of Last Resort (SOLR) process – the method by which all of the UK’s other collapsed energy companies have been resolved in recent months.
In the SOLR process, a company’s operating licence is removed and bids are sought from other industry players for its customer base, with losses incurred by the acquirers of those customers then recouped through an industry levy.
Under the SAR, the administrator has a legal duty to consider the interest of customers, unlike a conventional insolvency process where the primary duty is to creditors.
In a long-established statement on its website about SAR, Ofgem said a memorandum of understanding had been drawn up between itself, the Treasury and BEIS, adding: “Provisions for this administration scheme for energy suppliers were included in the 2011 Energy Act.
“It has never been used before because a large energy supplier has never been insolvent.”
A government spokesman did not immediately comment on Monday but said three weeks ago: “Ofgem – as the expert regulator – is monitoring the situation across the energy market for the continued impacts on high worldwide wholesale gas prices.
“We have put in place the powers and robust processes to ensure customers do not experience any disruption to their energy supply and that costs are minimised if a supplier should exit the market.”
Image: About two million customers have seen their energy supplier collapse since the start of September
The regulator added in late October: “There has been an unprecedented increase in global gas prices which is putting financial pressure on suppliers.
“We know this is a worrying time for many people and our number one priority is protecting customers.
“In the event a supplier fails, Ofgem and government have robust processes in place to ensure customers’ electricity and gas supply continue and domestic customers’ credit balances are protected.”
The ongoing crisis in the energy sector has sparked demands from some executives for a removal of the industry price cap or a bailout fund to help with the rescue of smaller suppliers.
Kwasi Kwarteng, the business secretary, has rejected both demands.
Last week, Ofgem said it would seek to adjust the industry price cap more frequently as a result of recent challenges, meaning British consumers are expected to face even higher bills in the years ahead.
The collapse of one of the biggest challengers to the big players – the largest of which are British Gas, E.ON Next, EDF Energy, Scottish Power and Ovo Energy,, which acquired SSE’s retail business – would be a blow to hopes of a more varied and competitive market.
Octopus Energy, which like Bulb supplies 100% renewable energy, has established itself as an independent, well-funded challenger and now boasts 2.5 million customers across more than 4 million accounts.
Major car manufacturers and two trade bodies are to pay a total of £461m for “colluding to restrict competition” over vehicle recycling, UK and European regulators have announced.
The UK’s Competition and Markets Authority (CMA) said they illegally agreed not to compete against one another when advertising what percentage of their cars can be recycled.
They also colluded to avoid paying third parties to recycle their customers’ scrap cars, the watchdog said.
It explained that those involved were BMW, Ford, Jaguar Land Rover, Peugeot Citroen, Mitsubishi, Nissan, Renault, Toyota, Vauxhall and Volkswagen.
Mercedes-Benz, was also party to the agreements, the CMA said, but it escaped a financial penalty because the German company alerted it to its participation.
The European Automobile Manufacturers’ Association (Acea) and the Society of Motor Manufacturers & Traders (SMMT) were also involved in the illegal agreements.
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The CMA imposed a combined penalty of almost £78m while the European Commission handed out fines totalling €458m (£382.7m).
The penalties were announced at a time of wider turmoil for Europe’s car industry.
Manufacturers across the continent are bracing for the threatened impact of tariffs on all their exports to the United States as part of Donald Trump’s trade war.
Within the combined fine settlements of £77.7m issued by the CMA, Ford was to pay £18.5m, VW £14.8m, BMW £11.1m and Jaguar Land Rover £4.6m.
Lucilia Falsarella Pereira, senior director of competition enforcement at the CMA, said: “Agreeing with competitors the prices you’ll pay for a service or colluding to restrict competition is illegal and this can extend to how you advertise your products.
“This kind of collusion can limit consumers’ ability to make informed choices and lower the incentive for companies to invest in new initiatives.
“We recognise that competing businesses may want to work together to help the environment, in those cases our door is open to help them do so.”
A household energy supplier has failed, weeks after it attracted attention from regulators.
Rebel Energy, which has around 80,000 domestic customers and 10,000 others, had been the subject of a provisional order last month related to compliance with rules around renewable energy obligations.
The company’s website said it was “ceasing to trade” but gave no reason.
Industry watchdog Ofgem said on Tuesday that those affected by Rebel’s demise did not need to take any action and would be “protected”.
Customers, Ofgem said, would soon be appointed a new provider under its supplier of last resort (SoLR) mechanism.
This was deployed widely in 2021 when dozens of energy suppliers collapsed while failing to get to grips with a spike in wholesale energy costs.
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Why is the energy price cap rising?
The last supplier to go under was in July 2022.
Ofgem said new rules governing supplier business practices since then had bolstered resilience.
These include minimum capital requirements and the ringfencing of customer credit balances.
The exit from the market by Bedford-based Rebel was announced on the same day that the energy price cap rose again to take account of soaring wholesale costs between December and January.
Tim Jarvis, director general for markets at Ofgem, said: “Rebel Energy customers do not need to worry, and I want to reassure them that they will not see any disruption to their energy supply, and any credit they may have on their accounts remains protected under Ofgem’s rules.
“We are working quickly to appoint new suppliers for all impacted customers. We’d advise customers not to try to switch supplier in the meantime, and a new supplier will be in touch in the coming weeks with further information.
“We have worked hard to improve the financial resilience of suppliers in recent years, implementing a series of rules to make sure they can weather unexpected shocks. But like any competitive market, some companies will still fail from time to time, and our priority is making sure consumers are protected if that happens.”
Harrods is urging lawyers acting for the largest group of survivors of abuse perpetrated by its former owner to reconsider plans to swallow a significant chunk of claimants’ compensation payouts in fees.
Sky News has learnt that KP Law, which is acting for hundreds of potential clients under the banner Justice for Harrods, is proposing to take up to 25% of compensation awards in exchange for handling their cases.
In many cases, that is likely to mean survivors foregoing sums worth of tens of thousands of pounds to KP Law, which says it is working for hundreds of people who suffered abuse committed by Mohamed al Fayed.
Under a redress scheme outlined by the London-based department store on Monday, which confirmed earlier reports by Sky News, claimants will be eligible for general damages awards of up to £200,000, depending upon whether they agree to a psychiatric assessment arranged by Harrods.
In addition, other payments could take the maximum award to an individual under the scheme to £385,000.
A document published online names several law firms which have agreed to represent Mr al Fayed’s victims without absorbing any of their compensation payments.
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KP Law is not among those firms.
Theoretically, if Justice for Harrods members are awarded compensation in excess of the sums proposed by the company, KP Law could stand to earn many millions of pounds from its share of the payouts.
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‘Many more’ likely abused by Fayed
A Harrods spokesperson told Sky News on Tuesday: “The purpose of the Harrods Redress Scheme is to offer financial and psychological support to those who choose to enter the scheme, rather than as a route to criminal justice.
“With a survivor-first approach, it has been designed by personal injury experts with the input of several legal firms currently representing survivors.
“Although Harrods tabled the scheme, control of the claim is in the hands of the survivors who can determine at any point to continue, challenge, opt out or seek alternative routes such as mediation or litigation.
“Our hope is that everyone receives 100% of the compensation awarded to them but we understand there is one exception among these law firms currently representing survivors who is proposing to take up to 25% of survivors’ compensation.
“We hope they will reconsider given we have already committed to paying reasonable legal costs.”
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Further claims against al Fayed
Responding to the publication of the scheme on Monday, KP Law criticised it as inadequate, saying it “does not go far enough to deliver the justice and accountability demanded by our clients”.
“This is not solely a question of compensation but about justice and exposing the systematic abuse and the many people who helped to operate it for the benefit of Mohamed al Fayed and others.”
Seeking to rebut the questions raised by Harrods about its fee structure, KP Law told Sky News: “KP Law is committed to supporting our clients through the litigation process to obtain justice first and foremost as well as recovering the maximum possible damages for them.
“This will cover all potential outcomes for the case.
“Despite the Harrods scheme seeking to narrow the potential issues, we believe that there are numerous potential defendants in a number of jurisdictions that are liable for what our clients went through, and we are committed to securing justice for our client group.
“KP Law is confident that it will recover more for its clients than what could be achieved through the redress scheme established by Harrods, which in our view is inadequate and does not go far enough to compensate victims of Mr al Fayed.”
The verbal battle between Harrods and KP Law underlines the fact that the battle for compensation and wider justice for survivors of Mr al Fayed remains far from complete.
The billionaire, who died in 2023, is thought to have sexually abused hundreds of women during a 25-year reign of terror at Harrods.
He also owned Fulham Football Club and Paris’s Ritz Hotel.
Harrods is now owned by a Qatari sovereign wealth fund controlled by the Gulf state’s ruling family.
The redress scheme commissioned by the department store is being coordinated by MPL Legal, an Essex-based law firm.
Last October, lawyers acting for victims of Mr al Fayed said they had received more than 420 enquiries about potential claims, although it is unclear how many more have come forward in the six months since.