One of Britain’s top corporate troubleshooters is being lined up to spearhead a multibillion pound rescue of Thames Water after the company’s preferred bidder walked away.

Sky News can reveal that Mike McTighe is working with Thames Water’s largest group of creditors on a plan to restructure the company’s debts and inject new funds in the hope of avoiding nationalisation.

Mr McTighe, whose portfolio of chairmanships includes the Daily Telegraph’s publisher and Openreach, BT Group’s infrastructure arm, is said to have begun meeting stakeholders in recent weeks.

If the Class A creditors’ proposal is successfully executed, Mr McTighe would probably take over as chairman of Thames Water, according to people close to the situation.

Mr McTighe has earned a reputation as a turnaround expert, but also chairs companies such as IG Group, the financial spreadbetting company, and Together Financial Services, the non-bank lender.

The recruitment of such a prominent businessman to lead the lenders’ efforts will add momentum to a plan which increasingly looks like the only alternative to landing British taxpayers with a vast rescue bill.

The group’s proposal would include swapping several billion pounds of Thames Water’s debt for equity, as well as injecting substantial new funding.

Thames Water is Britain’s largest water utility, serving more than 15 million customers.

However, decades of poor performance and financial engineering have left it carrying close to £20bn of debt and facing hundreds of millions of pounds in regulatory fines.

The Class A creditor group, which represents about £13bn of Thames Water’s borrowings, includes some of the world’s most powerful investors.

Elliott Management, the New York-based firm, is among those exposed to a collapse that could leave Thames Water in a special administration regime (SAR) – a government-sponsored insolvency process aimed at providers of key infrastructure services.

Other members of the creditor group include institutions such as Aberdeen, Invesco, Apollo Global Management and M&G.

A source close to the creditor group said: “We have done a huge amount of diligence and work on a plan to turnaround Thames.

“We are the only bidders who will be able to complete this transaction within the necessary timeframe.”

The fact that Mr McTighe has been persuaded to join their effort will revive hope that a private sector solution to Thames Water’s crisis can still be found.

On Tuesday, the company announced that KKR, its preferred equity partner for the last two months, had decided not to proceed with a deal.

Sky News revealed that talks between Henry Kravis, the KKR co-founder, and Sir Keir Starmer’s top business adviser had taken place over the weekend in an effort to prevent the deal from collapsing.

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It was unclear on Tuesday whether CKI, the Hong Kong-based company which controls swathes of UK infrastructure assets, might seek to revive its interest in a deal with Thames Water.

Sir Adrian Montague, the company’s current chairman, said: “Whilst today’s news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.”

In recent weeks, Thames Water has been fined a record £123m by Ofwat for separate transgressions relating to dividend payments and environmental pollution, and found itself embroiled in a bitter political row over whether retention payments it had lined up for executives were classified as bonuses.

The company has also been at the centre of a legal battle which culminated in the Class A group of lenders providing a £3bn emergency loan in March following a court challenge launched by a smaller creditor group.

The government described Thames Water as “stable” on Tuesday, but said it was ready to step in and take control of the company if required to.

The company effectively faces a deadline of late July to finalise a rescue deal because of a referral of its five-year regulatory settlement to the Competition and Markets Authority.

A spokesperson for the Class A creditors declined to comment on Tuesday evening.

The chancellor and foreign secretary are threatening to take Roman Abramovich to court to seize the proceeds of his Chelsea FC sale.

The Russian oligarch, who is sanctioned by the UK government over his alleged links to Vladimir Putin, sold Chelsea for £2.5bn to an American consortium in 2022, after Russia’s invasion of Ukraine.

Those funds remain in a frozen UK bank account but are meant to be used for humanitarian causes linked to the Ukraine war.

Chancellor Rachel Reeves and Foreign Secretary David Lammy have now said they are “deeply frustrated” an agreement cannot be reached with the oligarch and will take him to court if it cannot be dealt with soon.

In a joint statement, they said: “The government is determined to see the proceeds from the sale of Chelsea Football Club reach humanitarian causes in Ukraine, following Russia’s illegal full-scale invasion.

“We are deeply frustrated that it has not been possible to reach agreement on this with Mr Abramovich so far.

“While the door for negotiations will remain open, we are fully prepared to pursue this through the courts if required, to ensure people suffering in Ukraine can benefit from these proceeds as soon as possible.”

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Abramovich was forced to sell Chelsea – which he bought for a reported £140m – after 19 years of ownership, after being sanctioned by the government over his alleged close ties to the Russian president – something he denies.

The sale was made under the supervision of the Office of Financial Sanctions Implementation, under the proviso the proceeds go to humanitarian aid in Ukraine.

They cannot be moved or used without a licence from the office.

In March, the Foreign Office said officials were in talks with Abramovich’s representatives, but multiple sources told the BBC there had been no meetings between any Labour ministers and members of the foundation set up to oversee the funds since last July’s general election.

They said there was a deadlock and a political decision by a minister is needed to negotiate and sign off an agreement.

It is not known if there have been meetings in the three months since then.

The £2.5bn – and interest accrued – would make up for some of the reduction in the aid budget, announced in February.

“Interlocking failures” in the water sector across England and Wales can be fixed through fundamental reform in five key areas, according to a major interim report.

The Independent Water Commission, established last year and led by a former deputy governor of the Bank of England, was scathing of government and regulatory oversight of the industry – long blighted by criticism over performance, particularly over sewage spills, shareholder payouts and bonuses for bosses.

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Sir Jon Cunliffe said: “There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector.

“We have heard of deep-rooted, systemic and interlocking failures over the years – failure in government’s strategy and planning for the future, failure in regulation to protect both the billpayer and the environment and failure by some water companies and their owners to act in the public, as well as their private, interest.

“My view is that all of these issues need to be tackled to rebuild public trust and make the system fit for the future. We anticipate that this will require new legislation.”

The commission, which is due to make its final recommendations later in the summer, failed to rule out the creation of a super regulator to bring oversight into alignment.

Currently, regulation is muddied by a multi-body approach that includes Ofwat and the Environment Agency.

The five areas under scrutiny:
• Long term direction from government, including through the planning process.
• The creation of a simplified legislative framework, which could include new objectives around public health.
• Regulation but “a fundamental strengthening and rebalancing of Ofwat’s regulation is needed”, it is argued.
• Transparency and accountability within private water firms.
• The management of water industry assets, including pipework.

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Sir Jon added: “I have heard a strong and powerful consensus that the current system is not working for anyone, and that change is needed. I believe that ambitious reforms across these complex and connected set of issues are sorely needed.

“I have been encouraged to see, on all sides of the debate, that people have been prepared to engage constructively with our work; I look forward to that continuing as we enter the final stages.”