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Stricken 2e2 threatens data centres: Your money or your lights

£40k from biggest fish, £4k from minnows, to keep servers running

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The collapse of UK IT contractor 2e2 descended into farce tonight as its largest data centre customers were told to each pay £40,000 just to keep the lights on.

Clients of debt-crippled 2e2 were told to cough up the cash to keep systems running until they transition to another provider, sources close to the situation have told The Channel.

Yesterday some 627 workers were given their marching orders after administrator FTI Consulting confirmed it was unable to sell the business as a going concern, and started to wind down operations.

As a result of the mass exodus, 2e2 will no longer operate services including Flexible Resourcing, Business Applications, Unified Comms and Field Support.

"You will need to put alternative arrangements in place with immediate effect," FTI told customers in a letter (PDF) on 2e2'S website.

However the administrator said that due to the "critical nature" of 2e2's data centre services it was seeking to "maintain the data centre infrastructure and keep personnel who operate the data centres, to facilitate an orderly migration of the data and systems or some other alternative solutions".

Sources told The Channel that just four staff remain at 2e2 maintaining the data centre service. The problem is FTI has run out of cash, having agreed to pay the staff it made redundant yesterday.

"We will require customers to provide immediate funding to the [2e2] companies," it stated.

"In the event that the funding is not provided, we will be unable to maintain the data centre infrastructure and we will have no alternative, other than to cease all operations without any managed wind-down of those operations," it added.

Customers have requested access to their data to transition to alternative providers but the volumes held are such that it could take 16 weeks to "ensure that the integrity of third party data and security is maintained", FTI stated in the letter.

FTI confirmed it has requested "the largest 20 data centre customers to contribute to the majority of the data centre costs for the period 6 February to 15 February, we are also seeking a standard payment of £4,000 plus VAT from you and all other smaller data centre customers".

Company insiders told The Channel that FTI has asked for £40,000 apiece from the 20 largest data centre customers. The fees requested are based on estimates of employee costs, utilities, carriers, rent, rates, administration and other central expenses.

"The total estimated funding requirement through to Friday 15 February 2013 is £960,000," the administrator said.

"In the event that you do not provide a commitment to pay by 5pm on Friday 8 February, we may be unable to continue to provide services to you with immediate effect," it added.

The source told us: "There is no choice [for customers]. [They've] got to transition that data or server out of the [2e2] data centre."

The problem gets more tricky still as the kit in 2e2's data centre is leased from HP Global Financial Services so the "validity of title" needs to be passed by 2e2 to each customer, claimed the source.

"Then the customer has to pay the outstanding leasing costs. So you've got to get the server [and] the list of assets including virtual machines - but before we can do that we have to prove ownership, and then HP will novate the lease. This is no small task.

"The administrator should have communicated this earlier," said our insider.

HP Financial Services sent us a statement: "HP will continue to support 2e2 whilst minimising any risk or disruption of services to our mutual customers."

FTI refused to comment beyond what it stated in the letter. ®

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