UK Parliament moves to safeguard IT support for failing firms

Latest Parliamentary proposals could see IT suppliers banned from withdrawing support for failing businesses

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IT suppliers could soon be prevented from pulling the plug on contracts with companies that have been placed in administration, under new Parliamentary proposals.

The measures are being put forward in Parliament today, and are designed to give companies embroiled in insolvency proceedings the best chance possible of being rescued, by ensuring the work they do can continue.

As such, IT suppliers and communications providers will be banned from cutting off or charging premium rates for the services they offer to what the government terms "failing but viable" businesses.

The ruling will also cover the activities of other forms of utility providers, such as energy firms.

It is hoped the proposals, having stood up to Parliamentary scrutiny, will come into force in October 2015.

To ensure suppliers don't lose out should the company they're serving hit the wall, a number of safeguards will be put in place.

For example, suppliers will have the option to strike a payment guarantee with the insolvency practitioner, and can make a court application to have their contract terminated on hardship grounds.

The introduction of the proposals is being overseen by business minister Jo Swinson, who said IT and energy services are "essential" to ensure businesses can continue to trade while a rescue package is put together. 

"Rescuing struggling but viable businesses out of insolvency helps save jobs and improves the likelihood of payment to those owed money. Continued IT and energy supplies are needed for businesses to continue trading while options are sought about their future," said Swinson.

"These changes will help struggling businesses during rescue while providing confidence for the suppliers that they will be paid for the essential services they provide." 

Giles Frampton, president of The Association of Business Recovery Professionals (R3), said IT and utility supply issues often place "unnecessary hurdles" in the way of saving a viable business, which the proposals seek to address. 

"Without reliable and affordable IT and energy supply, attempts to save a business can be stymied quickly," he said.

"Over time, we would like to see more types of suppliers added to the list of those prevented from trying to steal a march on other creditors and take advantage of their importance to struggling businesses."

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