In the matter of: Bulb Energy Limited (In energy supply company administration)

In a special energy company administration, remuneration must be fixed by reference to the time properly given by the administrators and cannot be assessed by reference to a percentage of value. The court must also consider the statutory factors concerning complexity, exceptional responsibility, effectiveness and the value and nature of the property involved.

The statutory objective of securing energy supplies at the lowest reasonably practicable cost is relevant to assessing remuneration. General insolvency remuneration principles apply only so far as consistent with the policy-driven special administration regime. Where the sums are substantial and taxpayer-funded, the court must have sufficient evidence to assess whether they are fair, reasonable and commensurate with work properly undertaken. An independent remuneration assessor may assist, but does not displace the court’s decision.

Bulb Energy Limited entered the first special energy supply company administration under the Energy Act 2011. Its administrators applied for approval of remuneration of £24,969,221 plus VAT for a nine-month period and pre-appointment costs of £3,181,920.67 plus VAT.

The applications were initially adjourned after the court considered that the evidence did not permit a sufficiently informed assessment of the substantial sums claimed. An independent insolvency practitioner was then appointed as assessor. The central issues were the applicable statutory test for remuneration, the treatment of pre-appointment costs, and whether the evidence established that the sums claimed were properly incurred and fair, reasonable and commensurate with the work undertaken.

1. Remuneration. Under Part 8 of the Energy Supply Company Administration Rules 2013, administrators are entitled to remuneration, but it must be fixed by the court by reference to the time properly given by the administrators and their staff to matters arising in the administration. The remuneration cannot be fixed on another basis, such as a percentage of value.
2. The court must have regard to the matters in rule 76(5), including the complexity of the case, any responsibility of an exceptional kind or degree, the effectiveness with which the administrators carried out their duties, and the value and nature of the property involved. These factors provide a yardstick for assessing whether the time claimed was proportionate.
3. The statutory objective under section 95 of the Energy Act 2011—continuing energy supplies at the lowest reasonably practicable cost—was relevant to the assessment of remuneration. Insolvency Practice Direction principles concerning fair, reasonable and commensurate remuneration applied subject to the policy-driven nature of the special regime.
4. The court was not initially satisfied that the broad approach discussed in Re Nortel Networks NV [2019] EWHC 1182 (Ch) could be adopted without further scrutiny. An independent assessor’s report, together with the economic interest and approval of BEIS, provided sufficient evidence. The assessor assisted the court but did not usurp its decision-making role.
5. Pre-appointment costs had to be properly incurred before approval for payment. On the evidence, the costs were properly incurred and the remuneration and costs were fair, reasonable and commensurate with achieving the statutory objectives.
6. The administrators’ remuneration of £24,969,221 plus VAT and pre-appointment costs of £3,181,920.67 plus VAT were approved.