Bulb creditor Sequoia inflames insolvency row over £55m secured loan

The secured creditor to the parent company of Bulb has pushed through an eleventh-hour switch in its administrator as it seeks to protect a £55m exposure it has to the collapsed energy supplier.

Sky News has learnt that Sequoia Economic Infrastructure Income Fund, a London Stock Exchange-listed company, on Wednesday moved to block the appointment of AlixPartners as administrator to Simple Energy.

City sources said that Sequoia, which lent a total of £55m to Bulb, had lined up Interpath Advisory – the former restructuring arm of the big four accountancy firm – to handle Simple Energy’s insolvency instead.

The last-minute change is said to have taken place amid a dispute over demands made by Sequoia in relation to ongoing commercial and financial arrangements between Simple Energy and Bulb, the latter of which will now be operated under the auspices of Teneo Restructuring.

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Ofgem, the energy watchdog, applied to the courts on Wednesday to appoint Teneo as Bulb’s special administrator – the first test of a new bailout regime that will leave UK taxpayers on the hook for a bill that is likely to run to hundreds of millions of pounds.

Formal confirmation of the administrators’ appointments is expected by Thursday morning.

A person close to the Sequoia fund implied that AlixPartners had been removed from its role as Simple Energy’s administrator-in-waiting because of doubts about its independence and concerns that it was too close to the special administrator.

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Those suggestions were roundly rejected by people close to both AlixPartners and the wider Bulb process.

Sequoia was said by one insider to have been seeking the immediate repayment of a substantial chunk of its loan, with the remainder repaid in monthly instalments.

Sky News revealed earlier this week that Sequoia’s objections to terms of Bulb’s restructuring proposed by the government and Ofgem had become the final obstacle to the administrators being appointed.

In a stock exchange statement on Monday, Sequoia said it had “learnt via a press article that Bulb Energy Ltd is supportive of entering into the Special Administration Regime established by the Energy Act 2011”.

“If this were to occur, the Investment Adviser notes that the parent company of Bulb, Simple Energy Limited (“Simple”), would enter into normal administration.”

A transition services agreement (TSA) is to be put in place between Simple Energy and Bulb during the insolvency, according to insiders.

Meanwhile, Lazard, the US investment bank, is likely to be asked by the administrators to undertake an auction of the business over the coming months.

Competitors such as Octopus Energy, OVO Energy and Shell Energy Retail are expected to examine bids for Bulb, which has 1.7m customers.

Bulb, which is Britain’s seventh-largest domestic energy supplier, is the latest in a line of more than 20 suppliers to collapse since the start of August.

Both Lazard and AlixPartners were working with Bulb prior to its collapse on aspects of its cashflow management and fundraising options.

A spokesperson for the Department for Business, Energy and Industrial Strategy said on Wednesday: “Energy regulator Ofgem, with the government’s consent, has made an application to the court. We do not comment on ongoing court proceedings.

“The Special Administration Regime is long-standing, well-established mechanism to protect energy consumers and ensure continued energy supply when a supplier fails.

“Bulb customers do not need to do anything, there will be no disruption to supply or current energy prices, and credit balances are protected.”

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