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The Rescue Process and the Supply of Services

The Enterprise and Regulatory Reform Act 2013 provides the Government with powers to amend the existing provisions of the Insolvency Act 1986, Sections 233 and 372. These powers will ensure that companies and individuals involved in a rescue process do not forfeit the supply of essential goods or services or are forced to accept them on onerous terms. This could widen the description of the person supplying protected supplies to include private firms and services and will include anything done by electronic means. It seems that this is intended to catch essential IT supplies.

The protections would mean that termination related provisions in a contract for supply would cease to have effect if a company entered administration or a CVA. However, a supplier of essential supplies will be allowed to terminate supply unless the insolvency office holder personally guarantees the payment of any charges. These further protections will not apply to liquidations.

As yet no date has been specified for the implementation of these powers.

For further information, contact Nigel Cook, either by telephone on 01306 502294 or by email n.cook@downslaw.co.uk