UK high court approves Bulb takeover by Octopus Energy

Proposed buyout of collapsed supplier gets go-ahead despite judicial reviews lodged by rivals E.ON, Centrica and Scottish Power

The takeover of the collapsed energy supplier Bulb in a deal which would create the UK’s third largest gas and electricity provider has been approved in a London court.

Octopus Energy agreed last month to buy Bulb out of a government-handled administration process which has lasted for nearly a year.

Judge Antony Zacaroli was deciding whether to approve a scheme which will move some of Bulb’s assets into a new separate entity, and when to set a date for the transfer.

“I have made a decision that I should and will set an effective date,” he said, naming 20 December for the takeover.

The decision comes despite rivals E.ON, Centrica and Scottish Power lodging separate judicial reviews on Tuesday over what they claim is a lack of transparency around the terms of the deal between Octopus and the government.

Zacaroli said the judicial review proceedings were for an administrative court to decide and can run separately. The review could still delay or block the takeover.

If they failed in their reviews, then the suppliers could be liable for significant damages to Octopus and the administrators, sources said. It is understood that Octopus’s rivals are assessing their legal options.

The scrutiny around the collapse of Bulb has increased since the Office for Budget Responsibility said the cost of running the business in administration had hit £6.5bn. The government disputes this figure.

A spokesperson for Octopus Energy said: “The high court has rightly given the green light for the transfer to go ahead in December. Taxpayers will be saved from millions – even billions – of costs that could have been incurred if the process was dragged out.

“This is positive news for Bulb’s customers and staff, and starts to bring to an end the huge financial exposures for government and taxpayers.”

Lawyers for Octopus asked for the transfer to take place from 5 December to allow “sufficient time” to make the switch before 31 December.

“If completion does not take place by then, Octopus Energy will lose its wholesale energy supply arrangements, with the result that it will not be able to ensure continuity of supplies for customers,” its lawyers warned.

Zacaroli said he did not have “either visibility or control over the timing of judicial review proceedings”.

Bulb, which was founded by entrepreneurs Hayden Wood and Amit Gudka, grew rapidly using slick tech and marketing but its balance sheet was exposed by a sharp rise in wholesale gas prices last year. The bailout threatens to be the largest since the government intervened to prop up Royal Bank of Scotland and HBOS during the financial crisis.

Separately, court documents show that British Gas owner Centrica proposed a rival plan to the Treasury and energy regulator Ofgem which it argued would require less taxpayer support than the Octopus deal.

It proposed to split Bulb’s 1.5 million customer base between “a group of energy suppliers who do not present financial viability risks”.

Centrica has repeatedly claimed that smaller rivals do not have strong enough balance sheets. Last week it criticised regulator Ofgem for not intervening to order suppliers to ringfence consumer deposits.

E.ON, Centrica and Scottish Power declined to comment.


Alex Lawson

The GuardianTramp

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