UK Court Okays People’s Energy £286M Payout, Sets Claim Deadline

Key Takeaway

• UK court approves People’s Energy Supply Ltd.'s restructuring, enabling payouts from £286 million in assets due to hedged energy contracts.
• The plan includes a five-month deadline for claims related to a 2020 data breach affecting 300,000 customers.
• Founders could receive up to £50 million, contingent on full debt settlement, amid queries over payout transparency.

Restructuring Approval

A London court has sanctioned a restructuring plan for the defunct energy retailer, People’s Energy Supply Ltd., enabling payouts to creditors and owners from its substantial assets. The company, which collapsed in September 2021 amid a surge in energy prices, has approximately £286 million ($358 million) in assets from energy hedging contracts. Daniel Bayfield, representing the administrator, expressed in court that the firm is positioned to settle all debts in the foreseeable future, a situation he described as "surprisingly but not uniquely" optimistic given the circumstances of its collapse.

Hedging Contracts Liquidation

The collapse of People’s Energy was part of a broader trend where numerous UK energy suppliers failed due to escalating electricity and natural gas prices, exacerbated by reduced supply from Russia. Regulatory caps on passing these costs to consumers further strained these companies. However, People’s Energy, among others, had hedged energy purchases in advance, which were never delivered due to their insolvency. The administrators successfully liquidated these hedging contracts, resulting in a cash surplus for the company, thus enabling the possibility of creditor and owner payouts.

Data Breach Claims Deadline

In addition to addressing the financial restructuring, the court has imposed a five-month deadline for claims related to a data breach affecting around 300,000 customers in 2020. This breach represents a significant concern for the company's stakeholders, alongside the financial turmoil following its collapse. The resolution of these claims is a critical component of the restructuring plan, ensuring that affected parties have a clear window to seek redress.

Stakeholder Payouts

The court's approval of the restructuring plan also brings into focus the potential financial outcomes for the company's founders, David Pike and Karin Sode, who could receive up to £50 million. This potential payout is contingent on the full settlement of creditor debts. The judge queried the transparency regarding the founders' expected remuneration, highlighting the need for clarity in the payout process. Pike and Sode hold a 25% stake in People’s Energy through one entity, while a separate entity focused on charity projects holds the remaining 75%. The customer claims, potentially ranging from £500 to £1,500 each, will be addressed by the entity owned by Pike and Sode.

Management Quotes

• Daniel Bayfield, lawyer representing the administrator for People’s Energy:

  "The company will 'surprisingly but not uniquely' clear all debts in the 'reasonably near future.'"