Re Bulb Energy Ltd
| Jurisdiction | England & Wales |
| Judge | Briggs |
| Judgment Date | 15 December 2021 |
| Neutral Citation | [2021] EWHC 3680 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2021-002181 |
[2021] EWHC 3680 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
CHIEF ICC JUDGE Briggs
(Sitting as a Deputy High Court Judge of the Chancery Division)
Case No: CR-2021-002181
Mr Richard Fisher QC with Mr H Phillips appeared on behalf of the Energy Administrators of the Company
December 2021
CHIEF ICC JUDGE In this judgment I shall first explain the nature of the application; secondly, I shall provide some background; thirdly, I shall discuss my jurisdiction to make the orders sought; and lastly, reach conclusions on the application.
First, the application is made by Mr Cowlishaw, Mr Matthew David Smith, and Daniel Francis Butters as joint energy administrators (the “Energy Administrators”) of Bulb Energy (the “Company”), an energy supply company now in special administration. They are employees of Teneo Restructuring Limited. The application is made pursuant to paragraph 63 of Schedule B1 to the Insolvency Act 1986 as applied by paragraph 2 of Schedule 20 to the Energy Act 2004 and under rules 21, 98(6), 198(2) of the Energy Supply Company Administration Rules 2013 (the “2013 Rules”).
It is supported by a witness statement of Mr Matthew James Cowlishaw, one of the Energy Administrators, who is also the senior managing director of Teneo Restructuring Limited. There are no respondents, but the application has been served and notice been given to the FCA. The Energy Administrators have also made this application public by postings on Teneo's website. I am told by Mr Fisher QC that no creditor or other interested party has responded.
The application seeks the following orders: a direction under paragraph 63 authorising the Energy Administrators to dispense with the requirements in rule 22(h)(i) of the 2013 Rules to include the names and addresses and debts of all creditors who are customers of the energy supply company when making a statement of proposals pursuant to paragraph 49(1) of Schedule B1. In the alternative, an order under rule 21 of the 2013 Rules requiring the Energy Administrators not to deliver those parts of the statement of proposals containing the names, addresses and debts of the customer creditors to the Registrar of Companies, or to the company's creditors or members. Lastly, an order under rule 98 of the 2013 Rules and the court's general case management powers under CPR 3.1 for abridgement of time.
I shall now deal with the background in short and I will draw upon the statement of Mr Cowlishaw for that purpose.
The Energy Administrators were appointed by the court following an application by the Gas and Electricity and Markets Authority (“GEMA”) acting for the Office of Gas and Electricity Markets, (“Ofgem”), on 24 November 2021. In his first witness statement, Mr Cowlishaw explains that the Company was incorporated on 2 April 2013 under the name Regent Power Limited, company No.08469555, which is a private company limited by shares and registered at the office at 155 Bishopsgate in London.
The Company was granted an electricity supply licence under section 6(1)(d) of the Electricity Act 1989 on 17 July 2013 in the Company's former name, namely Regent Power Limited, and a gas supply licence under section 7A(1) of the Gas Act 1986, obtaining that on 27 July 2015.
The Company supplies energy to approximately 1.6 million domestic customers, where about 1 million are dual fuel customers and 600,000 single fuel customers. The Company also supplies energy to approximately 14,000 non-domestic customers.
It is critical to the operation of the Company's business that it receives services from its parent company, known as Simple Energy Limited. As at October 2021 the Company was balance sheet insolvent, with assets of approximately £307 million against current liabilities of £578 million and total long-term liabilities of approximately £54 million.
Based on the recent information available from the management, Mr Cowlishaw understands that the Company's assets comprise of about £104 million of receivables, £82 million of other current assets, and 1.6 million of tangible non-current assets.
On 20 November 2021 the Company sent a letter to Ofgem providing financial information and the background to its financial decline and stating that it believes that it was then or was likely to be unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986.
The Company has one secured creditor, being Sequoia Economic Infrastructure Income Fund Limited. That secured creditor's interests are held by BNY Mellon Corporate Trustee Service Limited in a capacity as security trustee and it holds an outstanding fixed and floating charge created pursuant to two composite debentures dated 17 December 2018 and 7 May 2021. Approximately £55 million is owed under those debentures.
The appointment of the Energy Administrators was not made pursuant to the 1986 Act but pursuant to the special administration regime introduced by the Energy Act 2011 (the “2011 Act”) that received royal assent on 18 October 2011. In common with all special administration regimes, the objectives of the administrator are modified in favour of social aims, relegating the usual creditor focus. An office holder is known as an “energy administrator” and it is his or her duty to perform the modified objectives. The objectives are expressed by section 95(1) of the 2011 Act as follows: (a) to secure that the supply of gas and electricity to customers is continued at the lowest cost which is reasonably practical to incur and (b) to secure that continuation of the administration becomes unnecessary by one or both of the means specified in subsection (2). The means specified in subsection (2) are (a) the rescue of the energy supply company as a going concern and (b) transfers falling within subsection (3). A transfer falls under subsection (3) if it is a transfer to another company or to two or more different companies of so much of the esc company's undertaking as it is appropriate for the purpose of achieving the objectives of the administration. Pursuant to subsection (5), rescue is the priority and takes preference to a transfer in achieving the objective of the energy supply company as transfers are only to be effected when either the rescue is not reasonably practicable without a transfer or where the objective of securing energy supply cannot be achieved through rescue without a transfer. There is also the possibility, in a given set of circumstances, that a transfer would produce a better result for the creditors or members of the company. The underlying aim of the objective though, is the maintenance and security of energy supply to consumers.
An order of Adam Johnson J dated 23 November 2021, made concurrently with the order for special administration, provided that:
“1. The Energy Administrators are authorised and directed to enter into, and cause the Administration Company to enter into, an administration funding agreement with the Secretary of State for Business Energy & Industrial Strategy in the form which is exhibited to Cowlishaw 1 (the “Funding Agreement”) and take such steps as are necessary or desirable to give effect to, and comply with, the terms of the Funding Agreement;
2. The Energy Administrators are entitled, pursuant to rule 162(1) of the Energy Supply Company Administration Rules 2013 (the “2013 Rules”) to give and deliver or send notices or other documents by electronic means to (a) any customer of the Administration Company who has provided an email address to the Administration Company, and (b) any other creditor who has customarily communicated with the Administration Company by electronic means;
3. Any requirement to give, deliver or send relevant document to any person may be satisfied by the Energy Administrators sending each of those person a notice in accordance with r.165 of the 2013 Rules.”
The funding agreement is not a matter for today, but Mr Cowlishaw explains that the funding agreement was highly significant in the sense that, without it, there would be no funding by which the Energy Administrators could pursue the objectives of the energy administration and no realistic prospect of achieving those objectives.
He has referred me to his first witness statement that was before the judge making the administration order and gave a judgment which at the date of this hearings is awaiting approval. He draws my attention to the following points.
(1) The...
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