UK Ministers Approve Contingency Plans For Potential Collapse Of Thames Water

UK ministers have appointed insolvency advisers to make contingency plans for the potential collapse of Thames Water. The company, which supplies 16 million customers, has been racing to pull together a deal to avoid financial collapse.

In a development first reported by Sky News, Steve Reed, the environment secretary, has signed off the appointment of FTI Consulting to advise on plans for Thames Water to be placed into a special administration regime (SAR). The appointment indicates that FTI is the frontrunner to act as administrator if the government enacted an SAR, although a court would ultimately approve such a step.

The government has been trying to avoid such an outcome, with the Treasury threatening that a potential £4bn bill from the SAR could be forced on to Reed’s department. This process would ensure that the taps stayed on for customers but would heap immediate costs on to the government.

Thames faced embarrassment earlier this year when its preferred bidder, KKR, pulled out of a deal at the last minute. Now, its class A creditors, who hold the bulk of the company’s senior debt, are in talks with the regulator, Ofwat, about a deal to inject capital into the company, which has £17.7bn of net debts and regulatory gearing of 84.4%. The company has been trying to get Ofwat to write off more than £1bn in expected fines from failures to invest in infrastructure to stop sewage spills, in order to secure a rescue deal. Chris Weston, chief executive of Thames Water, told a recent parliament committee that the company could not afford to pay these fines and continue to invest and operate as was expected by the regulator.

EDIT

https://www.theguardian.com/business/2025/aug/12/thames-water-advisers-appointed-to-plan-for-utilitys-potential-collapse