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By | Paul Kunert 6th February 2013 14:04

Lawyer: 2e2 customers should act quickly as liquidation looms

'Critical' alternatives must be sought - legal eagle

Any 2e2 customers that clung on in the hope a buyer could be found for fallen channel giant must act now to minimise disruption to service, a law firm has warned.

More than a week has passed since 2e2's 10 UK subsidiaries were placed in the hands of FTI Consulting, and the administrator seems to have run out of potential buyers, this morning laying off 627 people on top of the 345 it let go last week.

With a liquidation looking the likely option, customers should be "urgently looking at other suppliers," said Alan Owens, partner at Morrison & Foerster.

"Some customers may have been hoping 2e2 could be sold as a going concern so there is a smooth transition to the buyer. Today's news means that will not happen, they must go into the market and secure IT services," he told The Channel.

He said customers typically have a clause inserted in supplier contracts that enable them to seek alternatives in the event the existing supplier goes into administration.

This morning, FTI joint administrator Simon Granger said it was "unable to conclude a transaction which preserved the business as a going concern".

The inability to continuing funding the business has resulted "in large parts of the UK business being closed".

Data centre staff were kept on to allow a transition of services being hosted by 2e2 to another provider, and hundreds of Service Desk staff running IT services at customer sites remain employed.

Some larger 2e2 customers including Kellogs, Marks & Spencers, RBS and Vodafone last week leaned on contingency plans to find an alternative supplier.

This was part of the reason that potential buyers Daisy Group and Computacenter walked away, say sources.

Customers including NHS Trusts and O2 UK - which has a joint venture, O2 Unify, with 2e2 - have been assured they remain top priority in terms of service continuity.

One company insider, part of the Leeds-based Business Applications division made redundant last week, told the Reg that a high proportion of those staff were approached by customers in the middle of projects to see if they could continue that work.

"2e2 have let down so many customers," he claimed.

The Cabinet Office confirmed last week that 2e2 had been suspended from the IT Managed Services framework, the PSN Services gig, and the RM1557 framework on G-Cloud.

"Following the administration process, we will assess whether 2e2 can be reinstated on the frameworks or will have to be removed. No orders can be placed with 2e2 until the situation has been resolved," Government Procurement Services confirmed.

GPS was unavailable for comment at the time of publication. ®

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