A North East energy firm collapsed after a supplier and a funding partner called in debts of more than £4m – while it was also attempting to pay off a seven-figure bill to Ofgem.
Family-run business firm Breeze Energy Supply Ltd, based in Gosforth, Newcastle, had just been named by Citizens Advice as the top firm for customer service last August when it ran into problems with Ofgem, which issued the business with a provisional order for £1.98m in Renewables Obligation.
The Government’s Renewables Obligation schemes calls for all power suppliers to show they have sourced a certain amount of electricity from renewable sources by sending in Renewables Obligation Certificates (ROCs). If they don’t have enough certificates, firms have to make up the shortfall.
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Breeze paid £1.5m, leaving it with £486,000 to pay – but it ceased trading four months later, having not made any more payments to Ofgem.
Now an administrators’ proposal document filed at Companies House reveals the chain of events which led to the firm’s demise, including an 11th hour plea to rival firms in a bid to find a buyer or investor.
The document, by joint administrators Steven Ross and Allan Kelly at RSM, also shows that it is not known how much creditors will get back, despite being owed around £5.29m between them.
Breeze Supply – which saw massive turnover rise from just £19,498 in March 2017 to £5.45m 12 months later – had had an agreement for the sale and purchase of gas and gas shipping services with Contract Natural Gas (CNG) Ltd since 2016.
Also, six months before the administration, Breeze’s sole shareholder Energy Partners – which is controlled by Breeze director Kelly Hughes and her husband Danny Hughes – had also secured a funding facility of £1.3m from Starboard Capital SA, a Swiss-based investment vehicle.
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But three months after it had been landed with the Renewables Obligation order, Contract Natural Gas demanded payment of £2.594m which was due under its agreement. Around the same time Starboard demanded repayment of the £1.3m loan made to Energy Partners.
In the report, the administrators say: “The company did not have sufficient funds to pay the outstanding balanced.
“CNG introduced the directors to a US venture capital fund who had expressed interest in the 海角视频 energy sector to ascertain if investment could be made available to provide new funding to meet the working capital requirements. The director entered into dialogue providing information requested but no offer was received.
“Following this the director approached four trade competitors however none proceeded.”
Contract Natural Gas made attempts to help by seeking advice from RSM and Pinsent Masons LLP, but finally, on December 22 Breeze Supply’s licence was revoked by Ofgem and all 17,000 of its customers were moved to British Gas.
RSM, which was officially appointed on January 3, intially kept on seven of the 11 staff members to help with back office functions of the administration and three were still being maintained at the end of last month.
The administrators have estimated that Contract Natural Gas is owed £2.988m, unsecured creditors are owed £2.3m and preferential creditors owed £1,581, however, the directors have not yet lodged a statement of affairs as customer accounts have not been finalised and final debtor position isn’t known.
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As it stands, they believe just £437,033 is available to creditors.
In the meantime, the RSM advisors say the Breeze Energy Team is continuing to pursue final meter reads to calculate final accounts, issue final statements, notify customers of outstanding balances and provide credit information to British Gas.
The document adds: “The staff have received some 15,000 final meter reads and have worked extremely hard to process thus information and deal with the large volume of customers’ queries by phone and/or email.”
RSM added that its ongoing strategy will include quantifying creditor claims as well as giving British Gas information so it can issue refunds to credit account customers.