The REAL reason so many small energy suppliers have failed - it was inevitable.

ihatetrump

It's the number from the Administrators' Proposal - all filed on Companies House under Avro Energy. That's where the reference came about their failure to hedge future energy purchases - 'Simple Economics' as Jake Brown said......

The statement of Financial position makes interesting reading - especially the notes - sounds like they were in a right mess before they went under.

ihatetrump

A particular highlight from the administrators proposal with regard to AVRO was that they were obligated to pay £56M to OFGEM as part of it's ROC (Renewables Obligations Certificates) - this was due at 31/08/2021 and they had proposed deferring payment until a late payment deadline of 31/10/2021.It's a payment that all suppliers make as part of their Renewable Obligation. Together Energy is the largest supplier currently in default, having failed to make its' £12.4M payment by 31/10/21 (documented elsewhere).

So when AVRO threw in the towel, they had nearly £16.6M in the bank, owed £56M in ROC's and had already taken nearly £91M of customer advance payments that they hadn't used to hedge against the well documented supply price increases that were on the way. They also had no external source of financing (unsurprising) of shareholder equity.

By changing their year end by just 1 day on 28th June 2021 they bought an extra 90 days to avoid filing their 2020 accounts - which probably means they were unable to get an unqualified audit opinion. 

OFGEM demanded certain financial information from AVRO on 19/08/21 and finally called them into default on 14/09/21 when they failed to provide that information - 8 days later they ceased trading. 

Octopus will no doubt be submitting in due course a SoLR claim from OFGEM for the full £90M in credit balances - but how does that get funded? Higher costs and levies all round. 

[Deleted User]

That is just disgusting behaviour by the directors of Avro. They obviously have no conscience, social, moral, or otherwise, and are just playing the limited liability system. Presumably their personal assets/ill gotten gains are ring fenced, and they can set up again tomorrow somewhere else. How can that be legal? 

QrizB

Deleted_User said:

How can that be legal? 

It's not a bug, it's a feature.

MWT

Deleted_User said:

... and they can set up again tomorrow somewhere else. How can that be legal? 

There are provisions in the licence agreement that Ofgem could use to prevent them from directly managing another energy business but I don't see anything in there that would prevent them from having a beneficial interest in one in the future....

However, I don't think they will be rushing back into this business for a while as the opportunity to do what worked for them last time is gone for the moment at least.

ihatetrump

However, I don't think they will be rushing back into this business for a while as the opportunity to do what worked for them last time is gone for the moment at least.

Don't think they'll need to either having milked enough out of AVRO through 'management charges' by Sentido Marketing (owned by Jake & his Dad), interest free loan to Berkeley Swiss (owned by Jake & his Dad) - their pockets should be well stuffed by now.

Additionally, they still remain in the industry through their Directorships in Dyball Associates https://www.dyballassociates.co.uk/  
and share ownership via AVRO Holdings & AVRO Technology who have effective control over Dyball Holdings. Dyball is the company that set up multiple Energy Supply companies named after American States.  Try these for size: 

https://find-and-update.company-information.service.gov.uk/officers/g7cVk9hfY9d_dx5sneMLJ35Enhs/appointments

gt94sss2

Deleted_User said:

That is just disgusting behaviour by the directors of Avro. They obviously have no conscience, social, moral, or otherwise, and are just playing the limited liability system. Presumably their personal assets/ill gotten gains are ring fenced, and they can set up again tomorrow somewhere else. How can that be legal? 

If they are considered to have broken the last etc. they can be banned as acting as company directors

https://www.gov.uk/search-the-register-of-disqualified-company-directors

ihatetrump

Rather than losing their ability to hold Directorships, the greater and more painful risk they Jake & his Dad) face is if the administrators find evidence that they continued to trade while being insolvent or find evidence of wrongful trading. The protection of 'limited liability' can then be removed and they can be held personally liable for losses suffered by the creditors. 

It's unlikely to happen, but you just never know.......