In a statement, Bluegreen, which has 5,900 customers, said it was in an “unsustainable situation”.
Energy regulator Ofgem said Bluegreen’s customers would be moved to another supplier without them needing to act.
However, it recommended they take a meter reading to pass on to their new provider.
Ofgem said an “unprecedented increase” in global gas prices was putting financial pressure on suppliers.
The regulator’s director of retail, Neil Lawrence, said: “We know this is a worrying time for many people and news of a supplier going out of business can be unsettling.
“I want to reassure affected customers that they do not need to worry: under our safety net we’ll make sure your energy supplies continue.”
To customers with credit on their account, he said their funds would be protected.
“Ofgem will choose a new supplier for you and while we are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime,” he said.
“You can rely on your energy supply as normal.”
The regulator’s price cap, which covers 15 million households across England, Wales and Scotland, protects customers on default tariffs by limiting charges including how much customers pay per unit of energy.
But providers say they can’t pass on rising wholesale gas prices to customers because of the cap.
Already, companies supplying energy to around 2 million UK customers have gone bust. They include Avro Energy, People’s Energy and Green Supplier Limited. And there are concerns that there could be more to come.