Government proposals that will stop suppliers of IT and other essential services to insolvent businesses from seeking an unfair advantage over other creditors by making increased charges or payments of debts a condition to supply their services were announced today.
The proposals were tabled by Parliamentary Under-Secretary of State for Business, Innovation and Skills Lord Younger in an amendment to the Enterprise and Regulatory Reform Bill.

The proposals also require essential suppliers in the IT and utilities sectors to continue to supply goods and services to an insolvency practitioner (IP) trying to rescue a business unless specifically released by the IP or the court, benefitting creditors and employees.

Safeguards will be provided to ensure that suppliers who are obliged to continue supplying the insolvent business are adequately protected.

The Government will consult on the impacts before implementing the proposed powers.

Consumer Affairs Minister Jo Swinson said:

This is good news for employees of insolvent businesses, creditors and insolvency practitioners who are trying to rescue ailing companies.

Businesses are currently closing down because restructuring professionals are unable to secure the essential supplies they need to continue trading whilst they restructure or seek a buyer. This measure will ensure they can secure the supplies they need to deliver the best outcome for creditors and employees.

The measure also demonstrates the Governments commitment to doing all we can to save jobs and support growth in the economy.

These changes will give the same protection to IT supplies in an insolvency as applies to gas, electricity, water and telecommunications supplies, which are essential to the continuation of a business in the 21st century.