IT firms will have to continue to supply customers embroiled in insolvency proceedings from today as changes to the Insolvency Act come into play.
In the past, if a company begins insolvency procedures, its suppliers of gas, electricity and water were legally obliged to continue supplying their services. From today, providers of communication services have been added to that list, reflecting the essential nature of technology to businesses.
Point-of-sale terminals are included in the amendment, along with computer hardware and software; information, advice and technical assistance in connection with IT; data storage and processing; and website hosting.
"This order amends the Insolvency Act 1986 to give further protection to the essential supplies of insolvent businesses," the new law states.
The law follows a consultation on the matter, which prompted some lawyers to claim IT suppliers were "blissfully unaware" of the impact it might have.
In a note on its website about the changes, law firm Walker Morris said:
"Arguably the most striking aspect of the legislation is the inclusion of IT suppliers within the scope of the essential suppliers and the range of suppliers likely to be affected, including server providers, cloud storage, payment systems, website hosting and data storage.
"This is hard to argue with: in the modern world most businesses would not survive for long without their IT systems and if the supplier of essential IT services withdraws supplies or imposes new onerous terms, it may render a business rescue impossible."
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