Energy Insolvency

Often the fixed assets in these businesses are worth a lot less than the cost. The hoped-for profit would have come from a long-term contract to supply energy. In a few of the cases we have dealt with the power generated is lot less than forecast so the business will never make a profit. In one instance the energy plant just never worked as planned.

The issues with these businesses are numerous such as:

• A group of upset investors who are usually successful entrepreneurs used to getting their own way and don’t like being told it has gone wrong.
• They all think they can do a better job than the management.
• An asset worth considerably less than its cost. I have seen a £3m plant on leased land valued at only £100,000.
• Foreign suppliers of parts and engineering services who do not understand the insolvency process.
• Unpaid staff who have not been paid but have critical knowledge of the project.
• Retention of title suppliers who want to remove parts not paid for.

It is best for the board of directors to take insolvency advice early on. The sooner we are involved the more options will be left for them to choose from.