Bulb Energy: Is the energy company in liquidation and will it be bought out?
The current energy crisis is the consequence of rising energy prices, linked in part to the coronavirus pandemic and a price cap that limits companies on the amount they can charge customers. Bulb Energy is one of the UK’s largest energy companies, and many customers have started to fear that it is among the companies on the verge of bankruptcy.
On September 21, Bulb customer Billy Davis commented, “I had considered leaving Bulb Energy because I had nine price hikes in the past year, but just in case I didn’t change before they collapse, does anyone know what my rights are in terms of having a credit account with a failed vendor? “
So, is the company really likely to go into administration, and what impact would that have on customers?
Bulb going bankrupt?
Reports have circulated in the press and online in recent weeks that Bulb is working with investment bank Lazard on its balance sheet.
According to the Financial Times, the company could merge with another company or seek an injection of cash from investors, as options for new sources of funding.
Despite the reports, Bulb is not in the same immediate danger as some of the smaller companies that have gone bankrupt.
The company has spoken out against reports that it is heading towards administration or nationalization.
A Bulb spokesperson told Express.co.uk: “The information is not true. We are not in talks with the government or Ofgem over nationalization and we have not called for a bailout. .
“We buy our energy in advance and that means we are protected from the current wholesale costs that some small businesses find it difficult to manage.”
Regarding the ongoing conversations with investment banks and other vendors, a Bulb spokesperson said, “From time to time we explore various opportunities to fund our business plans and continue our mission. reduce bills and CO2 emissions.
“Like everyone in the industry, we monitor wholesale prices and their impact on business.”
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Could Bulb be taken back?
There has been no confirmation from Bulb that it will be taken over by another company.
Reports in the FT have suggested the company may merge or join another company, although details of this have not yet been clarified.
Sky News reports that Octopus Energy is among the companies that have requested access to a data room set up by Bulb’s financial advisers.
The room was set up in order to obtain new funding.
At the time of writing, it is not clear whether rival company Octopus has entered the room due to its interest in the takeover or partnership with Bulb, or whether it is simply exploiting its competition.
Octopus is currently one of the most financially secure companies in the industry and if it took over Bulb’s customer base it could bring its households to just under four million.
According to Bulb’s statement, these conversations are simply part of a review of ways to “cut bills and CO2” while “monitoring wholesale prices.”
How would I be impacted if my energy business goes into receivership?
In the event of bankruptcy of your energy supplier, the supply will be taken over by what is called a “supplier of last resort”.
They will be appointed by Ofgem and your refueling will continue as usual.
The downside, however, is that your energy tariff could end up being much higher, as customers won’t have a say in which supplier they end up with.
Martin Lewis, founder of Money Saving Expert, shared the insight in a Twitter video.
He said: “The cheapest rates available today are 40% higher than the cheapest rates available a year ago.
“So whoever comes out of a cheap fixed contract, you’re going to pay very, very significantly more than before. And it’s about choosing what you’re going to do at this point. “
He explained that the price caps set by energy companies are tied to past energy costs, which means bills are expected to rise further by April 1.
With prices set to rise further in the future, Martin offered options to the British.
He explained, “You can just stick with the price cap, the standard variable price that your business is going to charge you when you make a deal or are currently using, because there are very few rates cheaper than that. , for October 1st on a typical usage of £ 1,277. Indeed, you have a solution for six months that will not increase over that six month period. So you can go ahead, keep your fingers crossed that things arrange for less before arriving next April and then you move afterwards.
“The other alternative is to lock yourself into the cheapest one or two year solution that you can get right now.”