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Baglan Operations Limited to continue supplying Welsh Water and Neath Port Talbot Council with energy despite compulsory liquidation

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Photo by Marcin Nowak on Unsplash

This case concerned the question of whether the Official Receiver (OR) had the power to carry on the supply of electricity through a private wire network to a business park having regard to third party interests, including risks of flooding, should it case to supply electricity.  The OR considered that it did not have the power to continue to supply electricity because its powers are limited to “carry[ing] on [of] the business of the company…for its beneficial winding up”, such that third party interests could not be taken into account.   The case was therefore concerned with a novel and important question of whether and if so, the extent to which the Official Receiver had the power to consider wider third-party interests when exercising his powers as liquidator.

Because the energy was supplied through a private wire network the usual protection inherent in the Ofgem Supplier of Last Resort regime did not apply. Accordingly, when the company went into liquidation, local businesses, Welsh Water and the local authority were faced with the need to use generators pending connection to the national grid, should the electricity supply cease.  The Applicants sought an order of the Court pursuant to s. 168(5) of the Insolvency Act 1986 requiring Baglan Operations Limited to continue their supply of electricity pending connection to the national grid (in respect of which a statutory right to connection exists). They argued that the OR was a public authority under the HRA 1998 and was also bound by the Equality Act and that ceasing electricity supply was in breach of their human rights and required an Equality Impact Assessment.

The Court rejected that application, holding that the OR was likely not carrying out ‘public acts’ when acting as liquidator but that in any event the Applicants were not victims and could not therefore rely on the HRA. As regards Sofidel, the Court held that it had no property right in the supply of electricity.  The Court however, ordered that the OR did have power to continue its supply of electricity to Welsh Water and Neath Port Talbot Council (NPTC) until 18 April 2022.  The Court rejected the application by a private company, Sofidel, for continuation of supply.

Jessica Simor QC acted with Daniel Bayfield QC and Roseanna Darcy, instructed by Clifford Chance for the Official Receiver.  A copy of the judgment can be found here.