Insolvency advisers appointed in case water firm folds

INSOLVENCY advisers have been appointed to make contingency plans for the potential collapse of Thames Water.

The UK’s largest water company serves 16 million customers and has £18 billion of debt.

Steve Reed, the Environment Secretary, has appointed FTI Consulting to advise on placing the water firm in a special administration regime.

This can only be instigated when a company is unable or unlikely to pay its debts, meet its obligations or if it is in the public interest to do so. The company would be at the forefront, acting as an administrator, if the government enacted the regime, with approval from the courts as the next step.

A spokeswoman for the Department for Environment, Food and Rural Affairs said: “The Government will always act in the national interest on these issues.

“The company remains financially stable, but we have stepped up our preparations and stand ready for all eventualities, including applying for a Special Administration Regime if that were to become necessary.” A spokesman from Thames Water said: “Our focus remains on a holistic and fundamental recapitalisation, delivering a market-led solution which includes targeting investment grade credit ratings and returning the company to a stable financial foundation. Constructive discussions with our many stakeholders continue.”

Thames Water was hit with a record fine of £123 million earlier this year. A £104 million fine was levied for wastewater breaches after it was found to be responsible for 20 per cent of all pollution incidents last year.

The data published by the Environment Agency found that the company was responsible for 23,061 sewage spills with an average duration of 13 hours last year. Eighty-six spills were recorded from Henley Sewage Treatment Works, near the Fawley Stream, for 950 hours.

A fine of £18 million for breaches was levied for breaching dividend payment rules, while customers face rising bills of about £31 a year by 2030.