Troubled integrator 2e2 Group has left a potentially devastating trail of debts in its wake after calling in the administrators to its UK ops. The financial backers of the Berkshire-based business hauled in FTI Consulting on Monday afternoon, putting nearly 2,000 jobs at risk of redundancy. "We are working closely with …
This is going to HURT but it has been on the cards for some time and accentuated more recently. This is a monumental failure in the channel and will hurt suppliers considerably given the lack of credit insurance cover and the volumes traded by 2E2. Cover had not been available on the Group for at least the last four years or so. This is a group that accelerated acquisition in its early days and probably swallowed too big a fish in Morse. The resultant debt pile was never likely to be serviced or repaid and recent difficulties in achieving volume and profit and breach of bank covenants have proved the final nail in the coffin.
This will provide others with opportunity but the loss of someone as big as this will certainly reverberate across the sector. Lessons to be learned by others in similar growth modes'.
Re: Bloody hell...
"The resultant debt pile was never likely to be serviced or repaid and recent difficulties in achieving volume and profit and breach of bank covenants have proved the final nail in the coffin."
BAU in the Channel, some might argue. The article merely reports that they have called in FTI Consulting as administrators, but that's a rather interesting choice. FTI stands for Forensic Technologies International. Somebody in a business area not dissimilar to Kroll. Why would you use somebody like that, I wonder, rather than the usual likes of PWC or KPMG?
Re: Bloody hell...
Precisely...inference therefore is that FTI may have uncovered some more bad news..hence administration
Re: Bloody hell...
@Eadon - About thirty seconds of due diligence work would have told anyone that outsourcing to a company with 200M in debt and a revenue stream that couldn't service that debt not to be so silly.
Outsourcing isn't a good or bad thing, it's individual deals which are good or bad. There are many good, sound reasons to outsource and many not to. Most small to medium companies use hosting for their Internet presence - that's outsourcing, but it's a good idea. Some use offsite tape storage to keep their backups - again outsourcing. However, some sign supply deals with companies in the situation 2e2 were in...
I just hope there's no domino effect from this collapse.
I'm afraid there will be unfortenately.
Isle of man?
No mention of the Isle of Man operation though?
Hasn't 2e2 recently snapped up ~20 NHS and local council IT departments? Where does this leave the NHS and regional government cost savings targets where they have tried to save money by outsourcing to 2e2?
Cable and wireless will be ready to pick the meat from the bones.
Bloody Hell Indeed
This is going to affect some companies call centre operations very badly especially with their oversea centres.. Expect to see an increase in complaints.
recruiters hit hard
How many recruiters will have been hit very hard, we all know they have been such bad payers!
And all those poor contractors.
Re: recruiters hit hard
The day I cry over the fate of a recruiter is the day pigs will fly. Screw them, screw them all!!!
What about all the families and the knock on effect!
Sounds like you been rejected by a few , don't take it it personally .
Redundancy without consultation
Let's see if we can count the violations of UK employment law....
1. Today the administrators have made a swathe of people redundant without any consultation
2. They will not pay January payroll or any outstanding expenses
3. They intend to carve up what's left, there is also the suggestion that those remaining WILL receive January pay (TBC).
If you sold more maybe 2e2 would be in a strong position today.
Re: Redundancy without consultation
I would imagine that they've not technically been made redundant. If the company has gone bust, there are no jobs to make redundant. Likewise, if your company is in receivership, the workers become just another creditor who has to be paid off.
Re: Redundancy without consultation
About 300 went today (from ~2000). We get no January salary and no pay in lieu of notice. The rest are still employed.
"If the insolvency results in a breach of contract, e.g. non-payment of wages for services rendered, that is likely to constitute a repudiatory breach of contract, entitling the employee to treat the contract as at an end."
They were kind enough to confirm that we're free to seek alternative employment now.
Used to work there, got outsourced. Mixed feelings of schadenfreude towards the directors that took the obviously stupid (and unpopular with customers) decision to outsource, and sympathy for the people I know that worked there.
Worked there for 18 months and some of the brightest people I have ever worked with, alas none of these people ran the company! The management was out touch and ostrich syndrome as to moral and customer engagemnets, I should known when on my first day my laptop was 8 years old!!
I am employed by 2E2, There are over 80 2E2 employees on site and we don't know if we are going to get paid on Thursday... We have bills, Mortgages, Poll tax etc to pay ( So remember that .. How would you cope with that BOMBSHELL dropped on you , All the phone contacts have gone along with the web sites... Brown under pants time ) . There are 80 + 2E2 employees on site. The customer is going apeshit . If we don't get paid there will be a walk out (Plus a "Theft of services" Law suite)
Most important (This is for the people who like to slag off)
You have to feed your family. You have bills to pay.. Ok I'm job hunting FAST. (I have enough in reserve to cover a couple of months (I'm in my fifty's. Age is a problem) (Work out your monthly expenses, and how long you can survive on the dole)
2e2 website still open for business and even a bit about recruiting...technically, they are still trading, but recruiting?
My husband is/was also employed by these bastards and I'm curious to know whether existing staff will be paid their wages on Thursday?? If this is the case then I cannot understand how they can get away with paying 11,000 staff wages and not the 319 ( one of these being my other half) made redundant today.
If there is anyone on this forum who are still employed by 2e2 I would be interested to know if you get your salary - I really hope you do!!!
Also, if anyone knows how to magic money from nowhere to pay bills then please respond or we're f****d!!!
Who doesn't pay the mobile phone bill company!
I had interview with them and the HR Director , OMG what can I say about him.
Support not Management
I worked here from when it was Netstore and then became 2E2 however the 2E2 management made some bad choices as there were certain directors let go and others that should have gone in the first place. However the support teams did their best to ensure customer satisfaction whilst working really hard, so my concern is to the support teams.
As for cable and wireless well most of the management are x cable and wireless so now that can come in and purchase this lower than the £360mill and get a bargain and their old management team back, strange if this where to occur. The NHS will be unfortunate however I am sure they will sell the support contracts to someone like Attenda or Savvis.
So please don't give the technicians grief working here and should you be recruiting I would recommend the technicians from here as these will get my support where possible, as for management they can now try and get jobs in a tough sector with this huge failure on their CV and the lack of correct decisions they made (here come the 'start my own consultancy firm' era).
Re: Support not Management
CWC, Wipro or other could buy parts of 2e2 from the administrator in a fire sale, but why bother? The only thing of worth is a few clever people in areas such as UC and Security, and they won't exactly be difficult to headhunt directly out of the sinking ship. The battle to fire sale the remaining gems in 2e2 quicker than their customer base withdraws will inevitably be lost. Who would want to continue trading with a company that apparently can't even cover payroll?