Business Secretary Kwasi Kwarteng said a special administration regime was a temporary arrangement which provides an “ultimate safety net” that will protect consumers and ensure continued supply.
“We do not want this company to be in this temporary state longer than is absolutely necessary," he said.
Because of the existence of a cap on what companies can charge their customers, many businesses have been forced to sell energy for less than they bought it for.
Some of the biggest companies buy their gas far enough in advance that they have avoided the worst impacts of the price spike. However, many of the new smaller entrants into the market didn't hedge in the same way and have been placed under unprecedented pressure.
Ed Miliband, energy spokesman for Britain's main opposition Labour Party, said the problems afflicting the market are a result of the government's “failure of regulation.”
“Firms took risky bets and were allowed to do so and the government and Ofgem significantly deregulated the conditions of operation in 2016,” he said.