CNG Energy becomes the latest energy supplier to go bankrupt

What just happened?

CNG Energy became the latest energy supplier to go bankrupt, affecting about 41,000 customers, following Omni Energy Limited, MA Energy Limited, Zebra Power Limited and Ampoweruk Ltd. (1)

What does this mean?

Regulatory authority Ofgem added that interested customers should wait and contact a new supplier before attempting to change suppliers. The supervisor said it is working closely with the government and industry to keep customers safe this winter. Regulatory authority Ofgem said it will continue to provide energy to consumers and will be contacted by the replacement company within two weeks. (2)

A total of 22 companies have ceased operations this year, compared with 22 from 2021 to 2020. Bluegreen Energy Services also fell Monday, causing six small business collapse in just three days. (3)

Whenever an energy company goes out of business, Ofgems safety net protocols go into effect to ensure that power supplies to consumers are not interrupted and that all credit balances held by the company are protected. Ofgems security system ensures that there are no power outages for corporate customers and that outstanding credit balances (internal customers) are protected. (4)

The future of the retail division is different from the future of its wholesale business, which supplies gas to other energy suppliers. The global energy crisis and very high wholesale electricity prices have already hit many suppliers, and unfortunately methane is the next victim. The regulator Ofgem has assured customers that it will hand them over to a new supplier as soon as possible. CNG Energy is the latest energy supplier to crash due to rising wholesale prices in the industry.  (5)

How does this impact the legal sector?

The demise of CNG Energy will bring in work for law firms specialising in insolvency. Insolvency is the process of debt management when individuals or companies are unable to repay the debt on time. Its goal is to help people owed money get back as much as possible. Individuals and companies can voluntarily initiate bankruptcy and enter voluntary agreements with their creditors in order to find the best debt settlement for both parties, this outcome has much stricter limits, and payments and other checks can be imposed on the debtor. (6) Bankruptcy law regulates the position of companies and individuals in financial difficulty and cannot pay their debts when they fall due. This situation can lead to the initiation of insolvency proceedings in which legal claims are brought against the insolvent person and assets can be liquidated to pay outstanding debts to banks and creditors.  (7)

Subsequently, law firms will advise CNG Energy on interim and final depreciations as part of a claim by creditors and advise on the consequences of such actions and challenges where necessary. (8) Furthermore, in such situations, the restructuring and insolvency attorneys would advise management and other interested parties on what to do next, which may be an administrative request or a problematic merger. The restructuring and insolvency lawyers also will advise lenders to CNG Energy on how to avoid such a situation and formulate contingency plans.  (9)

Assessing Firm:

#Akin Gump LLP #Allen & Overy LLP #Clifford Chance LLP #Kirkland & Ellis International LLP #Latham & Watkins #Linklaters LLP #Freshfields Bruckhaus Deringer LLP #Milbank #Weil, Gotshal & Manges (London) LLP #White & Case LLP

¹ https://www.mirror.co.uk/money/breaking-cng-energy-stops-trading-25370910 and https://www.anandmarket.in/energy-crisis-uk-cng-energy-collapses-affecting-over-40000-customers/

² https://uberturco.com/cng-energy-collapses-affecting-41000-business-customers-2/ and https://uk.finance.yahoo.com/news/cng-energy-becomes-latest-uk-165810096.html

³ https://metro.co.uk/2021/11/03/energy-crisis-uk-cng-energy-collapses-affecting-over-40000-customers-15536748/ and https://www.anandmarket.in/energy-crisis-uk-cng-energy-collapses-affecting-over-40000-customers/

⁴ https://www.forbes.com/uk/advisor/personal-finance/2021/11/03/energy-market-updates/

⁵ https://www.energylivenews.com/2021/11/03/never-ending-domino-cng-energy-goes-bust/,https://www.telegraph.co.uk/business/2021/11/03/ftse-100-markets-live-news-cop26-finance-targets-energy/ and https://www.dailymail.co.uk/news/article-10163337/Thousands-schools-businesses-face-bill-shock-20th-energy-supplier-fails.html

⁶ https://www.irwinmitchell.com/personal/insolvency

⁷ https://www.chambersstudent.co.uk/legal-practice-areas/restructuring-and-insolvency and https://lewisnedas.co.uk/legal-services/corporate-commercial/insolvency-lawyers.html

⁸ https://www.stephensons.co.uk/site/businesses/insolvency_solicitors/insolvency_lawyers/ and https://www.scomo.com/services-for-business/insolvency-liquidation/insolvency-restructuring.html    

⁹ https://www.lawcareers.net/Solicitors/SolicitorPracticeAreas/Insolvencyrestructuring