It was reported yesterday that the company had enlisted KPMG to assess all options for the firm, including an administration.
KPMG was initially brought in to oversee an accelerated sale or merger with another provider, but the collapse of rival Extra Energy this week and well-documented pressures in the industry caused alarm among would-be investors.
A Spark spokesman said that the company is still working to merge the parent firm and its workforce with a larger provider.
“If successful, it would mean Spark becomes a standalone part of this large independent supplier - operating from our offices in Selkirk, Edinburgh and Horsham offices, supplying our customers under the new parent company’s licence,” he said.
Spark’s failure means it is the seventh small energy supplier to go bust this year, leaving hundreds of thousands of customers in limbo.
Spark has nearly 300,000 customers in the UK and employs 400 people at its head office in Selkirk in the Borders.
The failure comes days after Spark missed a deadline to make a £14.4 million renewable energy payment and barely 48 hours after rival Extra Energy went bust.
The energy market has been hit by stinging regulation, including a government-enforced price cap on standard variable tariffs amid anger over rising bills.
Spark is backed by its chief executive, Chris Gauld, and finance chief Hamish Osborn, who led a management buyout of the firm in 2016.
Mr Gauld said last week that the rising costs of wholesale energy and the price cap were hammering the sector.
Spark was founded in 2007, has a turnover of more than £200m and also has around 15,000 broadband and telecoms customers.
Rival firms Extra Energy, Future Energy, National Gas and Power, Iresa Energy, Gen4U and Usio Energy have all gone bust in 2018.
The energy supply of Spark’s customers will continue under Ofgem’s “safety net” procedure. Mary Starks, Ofgem’s executive director for consumers and markets, said: “Our message to energy customers with Spark is there is no need to worry.”