Jobs blow as Scots IT firm Hutchinson Networks goes bust
● Folding of Midlothian ‘rising star’ came after failure to secure further investment
Global technology business Hutchinson Networks has fallen into administration, seeing nearly 100 staff made redundant immediately.
Blair Nimmo and Ali stair McAlinden of KPMG have been appointed joint administrators of the firm, which was established in 2011, operating from the out skirts of Edinburgh, and delivering IT network services to blue-chip and SME customers globally.
The administrators said they had “no other option” than to make 94 of the company’s 109 staff redundant with imme - diate effect. The 15 remaining employees have been kept on to help continue trade the network operation centre and provide multi-cloud platform services to customers, while the sale of the business and assets is explored.
The company, which in the first half of 2018 received a seven-figure grow th capital investment, had experienced rapid growth as a result of major new contract wins over the past two years, and expected this momentum to continue in 2019 and beyond.
But in the second half of last year, some contract delays combined with the mixture of work secured “meant the company generated lower gross margins than forecast, resulting in monthly losses and cashflow pressures”.
The business targeted cost control measures and launched a process to secure further investment to support the next growth phase and further stabilise finances .“Unfortunately, this proved unsuccessful, and with no other sources of funding available, the directors resolved to place the company into administration.”
Blair Nimmo, joint administrator and UK head of restructuring at KPMG, said :“Hutchinson Networks was a rising star in global IT network deployment.
“It had invested heavily for future growth and secured attractive contracts for the second half of 2019. Despite the exhaustive actions of the directors to increase sales, reduce costs and attract new investment, the business was unable to continue trading.
“We are exploring a sale of the business and assets and would encourage any interested parties to contact us as soon as possible. Additionally, we are working with Scottish Enterprise and Skills Development Scotland to provide a full range of support to the company’s employees throughout this process.”
The business was founded by chief executive Paul Hutchinson and chief operating officer Stephen He slop. In May 2018 it announced a £2.2 million growth capital investment from funds advised by Y FM Equity Partners, the private equity fund manager, as it sought to accelerate international expansion and add about 50 tech staff to its 90-strong workforce.
At the time, the firm said it expected turnover to reach £11.5m last year, increasing to £16.5 min 2019, also pointing out at the time that its client base included a major UK airport and several Fortune 100 companies.