Where next for 2e2's customers?

Computing speaks to law firm Morrison & Foerster on the legal implications of the reseller's demise

Customers of integrator and reseller 2e2 have told Computing that they are "considering their options", but what are their options, and what are the legal implications if 2e2 was to go under or be bought out; can a customer walk away from their contract or do they have to see it out?

"It all depends on what the clause says, but routinely it would say that in an administration event like this, the customer has the option to terminate the contract," Alan Owens, partner at law firm Morrison & Foerster told Computing.

But far from being clear cut, the option to terminate will rest on how important 2e2's services are to the customer in question and whether 2e2 will be bought out or go under.

"I've heard that O2 said they can cope with this, whereas NHS trusts may lean much more heavily on 2e2 and not have a practical option on terminating the contract," Owens explained.

If 2e2 goes under

Yesterday, Computing revealed that NHS trusts were being treated as the "priority" by 2e2's administrators, FTI Consulting, but Owens suggests that if 2e2 does struggle to find a buyer and goes under, NHS trusts may have to look for another service provider.

"I suspect that plans for this are already in place. I suspect that there must have been some emergency meetings last week on the clear and present danger of 2e2 not coming out of administration," he said.

Owens went on to say that customers who have a lot of data kept by 2e2 would be keen for 2e2 to come out of administration very quickly to ensure that all of their data is secure and in hand.

If 2e2 is bought out

"The new 2e2, whoever it is bought by or if it is split into chunks, may not be an attractive proposition to the customers," said Owens.

But the money already invested in contracts - about £37m for Sussex Partnership NHS Trust for example - could mean that NHS trusts would be forced to stick with which ever company took over the integrator.

Where next for 2e2's customers?

Computing speaks to law firm Morrison & Foerster on the legal implications of the reseller's demise

But Owens believes that customers will be trying to give themselves as many options as possible.

"If 2e2 goes down then there are no employees, nobody there to service those customers at all, so customers will be looking at in-sourcing and alternative supplier options," he said.

The data, meanwhile, if held by 2e2 for a customer, is technically the customers' property, said Owens.

"Therefore when the liquidator takes possession of everything the company has it would have to take steps to return the data of the customers, but the issue here is that it takes time because it may be that 10 or hundreds of customers are looking for the same thing and very few employees or technically qualified staff may be around at the time to ensure the return of that data," he explained.

Owens advised firms to get their data returned now as there are still probably about two-thirds of 2e2 employees who are still employed - around 350 have been made redundant to date.

Those interested in buying...

"Anytime you are buying a company out of administration, the first thing you look at is if their customer base is attractive, which in this case it is. However, there is a lot of risk in that customers either have or may not want to stay with the new provider and that has a significant influence on the price," Owens said.

Last week, FTI Consulting claimed that there had been a "significant number of expressions of interest" in acquiring 2e2, and telecoms solutions provider Daisy Group had emerged as a potential bidder, but the Times reported that after losing out on high-profile customers such as Marks & Spencer, Vodafone, Citigroup and Kellogg, the proposition seemed far less attractive to potential bidders.

"There are decisions around the customer base, whether it can keep hold of them and how many are locked in. If you were the only bidder in town then you could pick up a bargain but apparently there is a lot of interest," concluded Owens.