Birmingham-based Tonik Energy has ceased trading with 250 employees expected to lose their jobs.
Tonik has more than 130,000 customers who will now be moved to a new supplier by energy regulator Ofgem.
A message on the firm’s website told customers that their supplies were secure and credit balances would be protected.
It was understood to be behind on £8.7m worth of payments to Ofgem and had been recently flagged by network administrator Elexon as being in credit default. That sometimes indicates a company is struggling financially.
Company sources say that a lifeline from shareholder Mitsui was pulled over ongoing concerns about cash flow.
Last year the Japanese conglomerate put £13m into Tonik and was expected to invest more this year.
However, management told staff on a conference call on Tuesday morning that they were losing their jobs and that the company would be shut down.
Chris Russell, chief executive of Tonik, did not respond to requests for comment.
At least half a dozen energy suppliers have collapsed this year as the pandemic amplified the strain of a highly competitive market and razor-thin margins.
In August, The Telegraph revealed that Go Effortless Energy was set to become the sector’s first victim of the pandemic as the supplier commenced a formal process of exiting the market.
The Stoke-based supplier, which had offered gas and electricity since 2014, told Ofgem that it intended to enter the Supplier of Last Resort (SoLR) scheme, which revokes a company’s licence to sell energy and transfers its customers to a new supplier.
The scheme is designed to avoid households being left without energy because their supplier has gone bust.
Go Effortless’s customers were later transferred to Octopus Energy.
Meanwhile, Nottingham City Council-owned Robin Hood Energy was forced to write off £24m of loans and slash more than 250 jobs as it fell into debt last month.
There is growing concern among suppliers that some customers will not be able to pay for their gas and electricity in the coming months if they are made redundant once the Government’s furlough scheme ends.
A number of firms have said some customers are cancelling direct debits – an early indication they are struggling to make payments.