English Court decision provides helpful clarity to insolvency practitioners appointed over energy companies, as well as their creditors

Quick read

On 11 November 2022, the English High Court handed down judgment in relation to a number of applications made by the insolvency officeholders of 10 UK energy suppliers, seeking clarification on issues arising in the insolvencies which had not previously been considered by the courts.

Background

The officeholders sought directions from the court on the following:

whether the claims in the insolvencies by UK energy regulator, Ofgem relating to outstanding renewables obligation payments (ROPs) were valid, and

whether the suppliers of last resort (SoLRs), who had taken on the customers of the insolvent energy suppliers, had a claim in unjust enrichment, arising out of the fact that they had honoured the credit balances of customers in the insolvencies following their appointment as SoLRs.

The outcome of these issues was relevant to a number of high-value claims lodged by Ofgem and the various SoLRs in the insolvent suppliers' estates.

Decision

In short, the Court ruled that each of the disputed claims in the proceedings, both relating to outstanding ROPs and subrogated claims of SoLRs, will need to be admitted by the officeholders as valid claims in the suppliers' insolvency proceedings.

Key takeaways

The judgment provides clarity in relation to the obligations owed by energy suppliers in an insolvency and, more generally, in relation to the law of unjust enrichment.

The outcome of the application was of particular interest not just to the officeholders in the relevant insolvencies but particularly to Ofgem, the SoLRs and other significant creditors in the insolvencies.