What happens if your business energy supplier goes bust?

The short version

If a business energy supplier collapses, your supply is not cut off. The regulator, Ofgem, picks another supplier to take over your account. That firm is called the supplier of last resort (often shortened to SoLR). You usually do not have to do anything to make the transfer happen.

What is less certain is the money side. Ofgem says household credit is protected, but businesses are not protected in the same way: their credit balance is dealt with by the administrator, so it can be lost. That makes credit the main thing at risk. The rest of this guide explains the steps, the deadlines to watch and the practical jobs worth doing in the first week.

How the takeover works

When Ofgem decides a supplier cannot carry on, it normally invites other suppliers to express an interest and assesses them against set criteria. The winner is the SoLR, and Ofgem can direct a supplier to take on the customers. Once that appointment is made, the failed company's gas and electricity licences are revoked, and it can then go into a formal insolvency process (R3, the insolvency trade body, describes this in its November 2025 explainer).

Ofgem says picking the new supplier could take up to 14 days. During that time you stay supplied, and nothing changes at the meter. You do not need to switch, and you should not cancel your Direct Debit unless the new supplier tells you to.

If Ofgem decides that no supplier of last resort is workable, it can apply for an Energy Supply Company Administration order instead. The failed firm keeps trading under an administrator until it is rescued, sold or its customers are moved. R3 notes this has happened only once in the energy sector.

What happens to your contract and prices

Ofgem says customers are placed on a six-month deemed contract with the new supplier, after which it reverts to the supplier's normal rate. You can ask for the new supplier's cheapest tariff or switch away, and the new supplier cannot charge you an exit fee.

That last point matters for businesses with a fixed deal. Your old fixed price came from a company that no longer exists, so the new supplier is not strictly bound to reproduce it. Look closely at the first bill and compare the unit rate and standing charge with your old paperwork. If you are unsure which category you are in, see deemed and out-of-contract rates.

Do not assume a "similar" rate is a good one. Ask the new supplier for its current fixed rates and compare them with the open market before the six months end.

Your credit balance: the real risk

Many small businesses pay by fixed Direct Debit and build up a credit balance over the summer. If the supplier fails, that money can be difficult to recover. Ofgem's own guidance states that business customers could lose a credit balance. Whether any credit is honoured depends on the particular failure, so check the notice from Ofgem and the new supplier's website for what it has committed to, and ask in writing if your business balance is not covered.

If the supplier goes into administration or liquidation, you may have to claim as an unsecured creditor through the insolvency practitioner. Expect delays and, possibly, only part of the money.

Worked example

A café pays £420 a month by Direct Debit, while its actual use costs about £340 a month. After 10 months it has built up a credit balance of (£420 − £340) × 10 = £800. If the supplier fails at that point, the £800 is the amount at risk, not the whole annual bill. Moving to a payment pattern that tracks real use, or paying by monthly reading-based invoice, keeps this exposure small.

What to do in the first week

1. Take a meter reading straight away and photograph the meter. Online accounts with the old supplier may disappear, and smart meters can drop out of smart mode after a supplier change, so manual readings may be needed. See how to submit a reading.
2. Download your final bills, contract and statements while the old portal still works.
3. Note your balance, in credit or debit, on the date of the failure.
4. Watch for the new supplier's welcome letter and check that your MPAN or MPRN, address and billing contact are right. Find your meter numbers if you do not have them to hand.
5. Keep paying what you owe to whoever the new supplier says to pay. If it has taken over your debt, it will usually contact you about a payment plan; if not, you may still owe the old company or its administrator.
6. Beware scams. Fraudsters use failures to ring customers. Use contact details from Ofgem or the new supplier's own website.

Complaints and the Ombudsman

The Energy Ombudsman cannot take a dispute against a company that has ceased trading, because it cannot enforce a resolution or pay an award, and it cannot progress cases that were already open. The SoLR also has no duty to take over old complaints, since it was not involved. For a new problem, raise it with the new supplier first. If it stays unresolved after eight weeks you can go to the Ombudsman. The process is explained in energy disputes and the Ombudsman. If you are a business with a complaint that was open when the supplier failed, contact the Ombudsman directly to check where you stand.

Why it matters when you choose a supplier

You cannot fully predict a failure, but you can limit the damage. Avoid large prepayments or overpaying by Direct Debit, take regular readings, and keep contract paperwork somewhere you can reach it. Our list of UK business energy suppliers and contract terms to check help you review what you are signing. A shorter FAQ version of this topic is at what if my supplier goes bust?.

Next steps

• Read the notice from Ofgem or the new supplier, and take a reading today.
• Record your credit or debit balance and keep copies of old bills.
• Ask the new supplier what it will do about any credit.
• Diarise the end of the six-month deemed period and compare prices before then.

Biz Energy is an independent information site, not a supplier or broker, and cannot see your account. Rules for business customers differ from those for households, so check the details with Ofgem or the Energy Ombudsman.