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Simon Jack is the Business Editor at BBC News.
Thames Water’s future could be determined today by the Court of Appeal. The company is looking to borrow an additional £3bn to avoid collapsing, but this plan is facing objections from a small group of creditors and Liberal Democrat MP Charlie Maynard. If the appeal is approved, Thames Water will have the opportunity to restructure its debts and attract new investments. However, if the appeal is not approved, the company may fall into government-backed administration in the coming weeks.
The outcome of this decision is bound to elicit strong reactions. Customer bills are expected to increase regardless of the verdict. Thames Water, along with the majority of lenders, argues that a government rescue would cost taxpayers billions, stall efforts to fix the business, and deter potential investors. On the other hand, opponents of Thames’ plan, like Mr. Maynard and Professor Sir Dieter Helm, believe that the company’s proposal primarily benefits its current lenders, and a government intervention may ultimately be cost-effective, as seen in previous cases like the Bulb energy company.
Various estimates have been presented regarding the potential cost of a government rescue for Thames Water. While the company themselves have stated it could reach £4bn, Mr. Maynard suggests a figure of £66m, and others believe it may have no long-term impact on taxpayers. The decision ultimately hinges on the perceived financial implications of a government intervention, with conflicting opinions from different stakeholders. The uncertainty surrounding the situation has prompted discussions about the risks and benefits of a Special Administration Regime (SAR) for Thames Water
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