World+dog left counting costs: Still can't bury corpse of titsup Brit IT giant 2e2
86% of book debt still not collected, staff tribunals continue
The administrator of deceased 2e2 appears to have made slow progress in collecting book debts, with tens of millions still outstanding months after the integrator-cum-reseller failed.
The latest progress report filed at Companies House today revealed that JP Associates (JPA), previously hired by 2e2 administrator FTI Consulting, had recovered just £5.8m to date.
"Our debt collector, JP Associates, continues to collect certain book debts on behalf of the [2e2] companies whilst we continue negotiations directly with a small number of the debtors with large outstanding balances," stated FTI in the report.
It anticipates another £2m being recovered before the ten 2e2 firms placed in administration are finally liquidated.
Collecting debts on the ledger had been complicated by the “bill and hold” system that 2e2 used, with both customers and suppliers voicing a “Retention of Title” (RoT) claim.
That said, the latest report revealed progress has now been made with RoT claims from 38 parties: 31 have been revolved in full; 5 are potential claims from credit insurers where no submission was made by the supplier; and two are in the process of being resolved.
As revealed by The Channel in April, 2e2 collapsed owing £412m to creditors, with trade creditors owed £51.6m including a whopping £12.78m to Arrow.
Others to be stung in the distie channel - though not nearly as dramatically - included Computer 2000 (£5.56m), Avnet (£2m), Ingram Micro (£654k) and e92 Plus (£499k).
Resellers that had sold kit to 2e2 - after it used up all of its credit in distribution - included IPTOMI (£2.7m), Misco (£2m) and Advanced Business Solutions (£697k).
Vendors also lost out with Cisco owed £5.8m, HP (£1.2m), EMC (£567k) and Dell - which tabled an offer of £350m for 2e2 in 2012 - indebted to the tune of £383k. FTI had realised assets of £32m back in the spring but revealed in today's report that "since our appointment, realisations across the group have totalled £36.5m".
This was made up in large by the £20.6m sale of 2e2's foreign subsidiaries in Spain, Ireland, Channel Islands and the Netherlands to Logicalis; offloading the O2 Unify joint venture to O2 for £4m; and the sale of the data centres, and security biz Diagonal.
Debts secured by floating charges were valued at £161.5m and unsecured non-preferential creditors had claims of £250.8m.
Secured credits - 2e2's banking syndicate - have seen £19m worth of fixed charge distributions made across the group, the report stated.
"There is expected to be a significant shortfall to secured creditors as total secured debt at the date of our appointment was circa £257.2m," the report stated.
FTI added that it anticipates paying a full dividend to preferential creditors of 2e2 UK – employees in respect of holiday, wages and pension contributions – but preferential creditors of 2e2 Holdings will likely get nada, as will all unsecured creditors.
During the administration process, some 972 staff were made redundant and 260 transferred to new employers under TUPE legislation.
FTI said it was aware of 110 workers that transferred, outside of those business sales, that moved under TUPE, where customers cancelled contracts, took the service in-house or entered into a new contract with a supplier.
FTI also revealed that it has responded to a "number of employment tribunal claims raised by former members of staff against 2e2 UK…The tribunal is yet to reach judgment in these matters".
We are awaiting comment from FTI and will update when it arrives. ®
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