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Integrator 2e2 axes 319 UK staff, halts pay cheques - insiders

Tough times revealed at troubled IT channel biz

Troubled integrator 2e2 Group has let go 319 UK sales and admin staff and, to add insult to injury, their pay for last month is being withheld, sources claim.

After weeks of negotiations by investors and bosses to keep the debt-laden business afloat, the decision was taken yesterday to call in administrators FTI Consulting for ten of 2e2's UK subsidiaries. Its overseas operations are unaffected.

Workers were told of the dramatic turn of events in a memo seen The Channel.

"We regret to announce that, following a deterioration in the trading position of the UK business and a failure to secure additional funding, the directors took steps to place a number of 2e2 UK companies into administration," the note stated.

A "series of briefings" took place this morning in which the strategy "going forward" was outlined. Insiders told us that 319 staffers were made redundant in the UK.

"These people will not get their pay that's owed," said our contact. "They have to apply to [the Insolvency Service's Redundancy Payments Office] for the money and were told to sign on as soon as possible."

Staff are braced for "mass" lay-offs if the administrator can't rapidly sell the business piecemeal. Yesterday's memo warned of redundancies and confirmed 2e2 is totting up its wage bill across the UK.

"We understand that payroll for January is due at the end of the month. We are currently reviewing these payments and the overall financial position of the companies," the letter stated.

Staff costs at 2e2 Group were more than £103m in calendar 2011 including nearly £90m in wages.

"If you worked a month and at the end of it your employer refused to pay, would you work for that for another month?" questioned a channel source.

Work related expenses will also be reviewed by the administrator, and all credit and fuel cards will be cancelled. All nonessential travel should be canned, 2e2 added. As with the job cuts, confirmation of what's happening with the pay cheques will likely emerge today, the firm said.

2e2 has written to its creditors and suppliers, and it is understood there are some rather meaty debts owed to distributors, vendors and rival reseller-cum-integrators, believed to be in the ballpark of tens of millions of pounds.

Likewise, 2e2 has sent notes to UK customers warning that to continue trading "will require [their] ongoing support".

"Customers will be asked to undertake to pay amounts due to the companies (without set-off or counterclaims) together with an undertaking to pay for the ongoing cost of services as they are incurred at the existing contractual rates," the memo to staff stated.

2e2 advised its workers that when "fielding calls" from vendors considered "critical" to the business, staff should "continue to trade and make a note of the contact details and message and forward by email to Martin Oxley" - who is the UK finance director.

"As the administrators intend to continue 2e2's operations for the time being we have asked suppliers to make goods and services available to 2e2 upon existing credit terms," 2e2 added. ®

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