Liquidation looms for 2e2 as administrators make 627 redundant

No buyers interested in purchasing the whole group, reveal administrators

Liquidation is looming for collapsed distributor and systems integrator 2e2 after administrators admitted that they have given up trying to sell the company as a going concern. As a result, the administrator has announced the loss of 627 jobs in the UK with immediate effect.

In a statement today, Simon Granger, the joint administrator from accountancy firm FTI Consulting, which was appointed at the end of January to reorganise the company and tout it to potential buyers, said that none of the potential buyers that had come forward was interested in buying 2e2 in one piece.

"Despite a significant number of initial expressions of interest in the UK business, we were unable to conclude a transaction which preserved the business as a going concern," he said.

"Regrettably, this failure to conclude a sale coupled with a significant future funding requirement has resulted in large parts of the UK business being closed, resulting in the loss of 627 jobs. We are in discussions with customers to secure the on-going operation of the datacentres and service desks while alternative options are explored," he added.

The redundancies were unavoidable, he added, because the company lacked the funding to continue operating many parts of the organisation.

Earlier, technical architect at the firm Phil Arundell had tweeted that 2e2 employees were facing a conference call this morning. He then tweeted the conference call as it happened, quoting Granger.

"No buyer for whole business so things have changed. Cost base too high and no prospect of getting a buyer for whole. Immediate reaction required to reduce burn rate," Granger had said.

Arundell then added that staff made redundant today would be paid up to and including today.

One of the employees to be made redundant last week, industry architect for the telco media and business unit at 2e2, Trevor Hackett, told Computing about the ordeal that he and many other employees are enduring.

"We always knew that there was some restructuring going on within 2e2, we went to a conference that 2e2 organised on the second week of January where we were told that the finance director was leaving and that there was a corporate restructuring with experts being parachuted in to look at the finances, but nothing more imminent at that stage," he said.

Hackett was working with 2e2 customer O2 Unify last Monday, and on that evening he received an email from the administrators stating that the company had been placed into administration and that employees should attend a call at 11am on Tuesday 29 January.

"At this stage, I thought there was a strong possibility that I'm going to go to my O2 meeting in Slough the next day and not get paid for it, and at the tail-end of Monday there was an awful lot of email traffic at 2e2 of people sharing their contact details outside of 2e2; there was already a feeling of something imminent and rather dark happening," he said.

Liquidation looms for 2e2 as administrators make 627 redundant

No buyers interested in purchasing the whole group, reveal administrators

Hackett explained that on the conference call on Tuesday, the administrator told the employees in question that they were being made redundant immediately, without any consultation, notice, redundancy payment or even payment for their work in January.

"We were being told that we would not be paid for January, they gave us some detail about how we could claim some money back from the government, but the question and answer question was particularly colourful," he said.

"The first person said this is illegal, which it is - there needs to be a consultation. Later, someone asked some good questions which were, are you still paying the people remaining? Are you still paying key suppliers? And what is the justification of why you are prioritising them over us? We never really got a satisfactory answer to that," he added.

Hackett admitted that perhaps he and other employees should have been more alert to the possibility of problems within 2e2.

"For those on the sales side, in hindsight maybe we should have been more alert to this. There were issues like getting to credit lines with certain suppliers that should have raised concerns. However, we had also received assurances that payroll would always be paid and that there would be no issue there," he said.

"The FT had said that the quality of financial information was so bad in 2e2 and that does not surprise me; generally, the organisation was not as well run as it could have been on the financial side," he added.

The former 2e2 architect went on to explain that Simon Burton was the financial director who left in late December "almost certainly not on his own accord", and that bizarrely two restructuring experts were brought in in the first week of January.

"I know that my boss met with one of them who was looking at the financial aspects of the business and they talked about what 2e2 was up to. So [the two experts] definitely did do work and attend, but I understand they were canned at the same time [as the 319 employees who were first made redundant], so it's just an odd situation," he said.

But Hackett feels sympathy for other employees, who may be in a worse situation than himself.

"There were people from the call who were seriously asking what they were supposed to eat this month, people are in different situations," he said.