PfP Energy ceases trading - here's everything you need to know

QrizB

Deleted, it's not helping.

devondiver

lisyloo said:

devondiver said:

lisyloo said:

agentcain said:

QrizB said:

devondiver said:

... 'the funds' (which do exist) ...

Evidence, please, that the funds do exist?

Bank transfer statements minus energy bills.
If the net result is positive, they exist unless someone consumed them unlawfully.

You don’t really understand how businesses and cash flow works do you.
you don’t have an individual physical piggy bank at the supplier.
cash flow means your money would have been (lawfully) used to pay other bills.
this is a perfectly lawful process called business cash flow.

No need to get personal, or overly simplistic.  

Okay, I need to consider the snowflakes in this day and age, but I would seriously suggest you also consider whether it’s wise to make potentially libellous statements about unlawful activity in this day and age.

I'm sorry, now your confusing me . . .

devondiver

bagand96 said:

- Write to your MP maybe if you feel it's worth your time and effort.

AT LAST!!

MWT

devondiver said:

bagand96 said:

- Write to your MP maybe if you feel it's worth your time and effort.

AT LAST!!

You wanted some way to bring pressure on the administrators, pretty sure writing to your MP does not meet that standard...

.. it may make you feel better though, but aside from that it is a complete waste of time sadly.

devondiver

Crikey! Is that the time already!? Haven't we got anything else to do? Must walk the dog at least before the boss gets back from buying herself a present. 😂 🤣 

devondiver

MWT said:

devondiver said:

bagand96 said:

- Write to your MP maybe if you feel it's worth your time and effort.

AT LAST!!

You wanted some way to bring pressure on the administrators, pretty sure writing to your MP does not meet that standard...

.. it may make you feel better though, but aside from that it is a complete waste of time sadly.

Better than nothing, maybe. 

agentcain

lisyloo said:

agentcain said:

QrizB said:

devondiver said:

... 'the funds' (which do exist) ...

Evidence, please, that the funds do exist?

Bank transfer statements minus energy bills.
If the net result is positive, they exist unless someone consumed them unlawfully.

You don’t really understand how businesses and cash flow works do you.
you don’t have an individual physical piggy bank at the supplier.
cash flow means your money would have been (lawfully) used to pay other bills.
this is a perfectly lawful process called business cash flow.

I do understand. Dial it down and stop being so patronising, genius.
That's proof enough that the balance exists. It doesn't mean there's a mattress with hard cash somewhere, jeez.

devondiver

MWT said:

devondiver said:

So the over-riding question remains:

What pressures currently exist to motivate Administrators/British Gas/Ofgem/Whoever to assign customer credit balances sooner rather than later?

 - And if the answer is, at it appears to be, 'little or none' then what pressures can be brought to bear which might improve this situation, when and by whom?

Short answer there is you cannot motivate the administrators to do anything beyond obtain the best possible deal for the creditors, and shareholders in order of their priority (secured first).

Generally that means nothing for the shareholders, little or nothing for the unsecured creditors and possibly a decent percentage for the secured creditors.

These are obligation outside of the energy supply licence which has by then been terminated so all the terms and conditions built into that instrument no longer apply.

This is why Ofgem protect the otherwise unsecured credit balances of the customers.

devondiver said:

The fact remains that the longer that 'they' can continue to withhold repayments the longer 'they' benefit from holding 'the funds' (which do exist) and the greater the cost to 'us'.

There will still be money in the company as the administration process has to be paid for, you can't put a company into administration without money from somewhere, and yes, by that point the original source of the remaining working capital was undoubtedly customer balances, but it is mistake to view this as 'withholding payments'.

That money is for the most part going to be used to pay the secured creditors, the only thing being passed to the SoLR from the administrators is the data that confirms what the customers credit balance actually is, they are not providing the funds to meet that obligation.

If sufficient funds remain at the end of the administration process to make a payment to unsecured creditors then yes, that money will be used to reduce the liability on the funds administered by Ofgem, but there is no separate account within the failed suppliers where all the customer money has been held, it is just part of the businesses working capital.

This isn't like a client account at a solicitor, nor could it ever be so as the advance payments from customers are needed to pay for the advance costs of purchasing on the energy market.

Which is why I really would like to see a direct link between offering fixed tariffs to customers and actually spending those advance payments received on advance hedging, which was not the case in at least one of the major failures...

Sorry I didn't respond to this sooner, although I did thank you as you have obviously put some thought into your reply - and your explanation will, hopefully, have been informative to some.

However, for those to whom it is not yet obvious, the point that I have been labouring is that the 'system' is fundamentally flawed. If companies entering the arena of public power supply are able to shore up their struggling cash flows by continuing to extract advance payments from their customers in the certain knowledge that they are, or are about to be, insolvent then something is seriously amiss.

The fact that Ofgem acts as a 'backstop' to ensure that the exploited customers are (eventually) duly recompensed is of little overall assurance when it is customers themselves who must ultimately foot the bill for these companies' misdeeds/mistakes. And the 'system' is further flawed if it provides no effective incentive to Admistrators/SoLRs/Ofgem to, within a reasonable time frame, return credit balances to the unwilling lenders whose money was used to shore up companies that would otherwise have been operating whilst insolvent.

I had rather hoped that by discussing this point on this forum that there may well be contributors who are sufficiently eloquent, experienced and knowledgeable (far more than I) as to be able to suggest, and even initiate, suitable future actions which may address those flaws in the system. But perhaps not. So write to MPs it is then.

MWT

devondiver said:

However, for those to whom it is not yet obvious, the point that I have been labouring is that the 'system' is fundamentally flawed. If companies entering the arena of public power supply are able to shore up their struggling cash flows by continuing to extract advance payments from their customers in the certain knowledge that they are, or are about to be, insolvent then something is seriously amiss.

This part is not unique to the energy industry and is part of every business that continues to trade until it doesn't...

The tricky part is the bit I've highlighted in bold...

This is where the directors have to walk a very thin line, you can never be 'certain' that you are 'about to be, insolvent' if you are certain, then you are insolvent, there is no 'about to be'.

So you'll see references to a business in trouble seeking further investment, and as long as that is a realistic prospect there is no certainty of being insolvent.

Very hard to change the rules and controls about insolvency just for the energy industry, if you seek change in that aspect then you would need to look closer at specific capital requirements or liquidity provisions perhaps which could trigger a loss of the license well before actual insolvency, and I think this is part of what Ofgem are talking about for future entrants to the market, but could be extended to active monitoring post-lisencse, not just pre perhaps...representations to Ofgem would be the way to go there.

devondiver said:

And the 'system' is further flawed if it provides no effective incentive to Admistrators/SoLRs/Ofgem to, within a reasonable time frame, return credit balances to the unwilling lenders whose money was used to shore up companies that would otherwise have been operating whilst insolvent.

This one is likely to remain intractable, the SoLR is utterly dependent on the Administrators for the production of the final bills, everything else flows from there.

Energy companies are obliged by the supply license to seek approval from Ofgem before appointing administrators as this gives them time to get the SoLR ready.

Currently the license is removed at the point the SoLR is appointed and the company is then permitted to proceed to Administration, only way I can see to get around the problem you raise would be to require the production of the final bills as a prerequisite to entering administration.

That may not be easy, and may in itself require funding support to the supplier to cover costs during that period, but perhaps that is preferable to the open-ended process we have now? .. again that would be one for representations to Ofgem...

QrizB

MWT said:

devondiver said:

If companies entering the arena of public power supply are able to shore up their struggling cash flows by continuing to extract advance payments from their customers in the certain knowledge that they are, or are about to be, insolvent then something is seriously amiss.

This part is not unique to the energy industry and is part of every business that continues to trade until it doesn't...

The tricky part is the bit I've highlighted in bold...

This is where the directors have to walk a very thin line, you can never be 'certain' that you are 'about to be, insolvent' if you are certain, then you are insolvent, there is no 'about to be'.

So you'll see references to a business in trouble seeking further investment, and as long as that is a realistic prospect there is no certainty of being insolvent.

I'm reminded of the Hemingway quote:

“How did you go bankrupt?”
“Two ways. Gradually and then suddenly.”