Ministers have lined up insolvency specialists to prepare for the potential collapse of Thames Water, reports have suggested.

Environment Secretary Steve Reed signed off the appointment of FTI Consulting to act as administrator in case Britain’s biggest water company fails to secure funding from a group of private investors, Sky news reported.

Contingency plans could see the water firm placed into a special administration regime (SAR), meaning it would be put into an insolvency process.

A spokeswoman for the Department for Environment, Food & Rural Affairs said: “The Government will always act in the national interest on these issues.

“The company remains financially stable, but we have stepped up our preparations and stand ready for all eventualities, including applying for a special administration regime if that were to become necessary.”

After weeks of hearings in the High Court, a funding plan for Thames Water was approved in February as part of a loan deal agreed internally last year.

The utility company supplies about 16 million households across London and the South East.

But it has at least £19 billion of debt, and had previously warned it only had enough money to keep running until March 24.

The new financing was designed to stop it from going bust, albeit temporarily.

Liberal Democrat MP for Witney Charlie Maynard said: “The Liberal Democrats have been warning the Government for months that the only option to get a grip on Thames Water at this point is to put it into Special Administration.

“Thames Water has been allowed to continue to flounder, while customers are made to pay sky high interest payments on the company’s billions of pounds of debt.

“Special Administration will allow debt to be written down so more money can be spent on cleaning up the sewage in our lakes and rivers. The final whistle needs to be blown on Thames Water and we need a new, capable regulator in place as soon as possible.”

Appeals against the approval of a plan to restructure Thames Water through a loan of up to £3 billion was later dismissed by Court of Appeal judges.

Thames Water, which serves around 25% of the UK’s population, owns more than 20,000 miles of water mains and more than 68,000 miles of sewers across London, the Thames Valley and the Home Counties.

A spokeswoman for Thames Water said: “Our focus remains on a holistic and fundamental recapitalisation, delivering a market-led solution which includes targeting investment grade credit ratings and returning the company to a stable financial foundation.

“Constructive discussions with our many stakeholder continue.”