E-suppliers/IT: terminating on counterparty insolvency suppliers

New laws to be brought into force next year will curtail the ability of some IT suppliers to terminate their agreement with counterparty where the customer becomes insolvent.

The Enterprise and Regulatory Reform Act 2013 (ERRA) includes, among a host of other new laws, a provision allowing the secretary of state to widen the scope of section 233 of the Insolvency Act 1986.

Section 233 provides that suppliers of gas, water, electricity and telecoms must continue to supply those utilities. The only condition on continuing supply that they may impose on the insolvency office holder is that he personally guarantees payment of future supplies. The legislation expressly prevents such a supplier from imposing as a condition of future supply a requirement that all arrears be paid in full…

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