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Hutchinson Networks Enters Administration

Duncan MacRae


Hutchinson networks Investment

“It’s a sad day for many as Hutchinson Networks have gone into administration,” one employee said.

Midlothian-based IT and networking specialists, Hutchinson Networks, has been placed in administration.

Blair Nimmo and Alistair McAlinden of KPMG were appointed as joint administrators to oversee the sale or closure of the business, which was founded by CEO Paul Hutchinson and COO Stephen Heslop (COO) in 2011.

The Hutchinson Networks team, consisting of 109 employees, was initially headquartered in a unique floating office space on a boat in Leith Dock, Edinburgh, before relocating to Shawfair Park in the south of Edinburgh in 2015.

That same year, the company created scalable cloud platform Fabrix, using software-defined networking (SDN) and network functions virtualisation (NFV) technologies.

In 2018, the company, which had a well established global professional services business, secured £2.2 million from funds advised by private equity house YFM Equity Partners.

The funding had been raised to finance additional marketing and operational resources and accelerate international growth. At the time, Hutchinson Networks stated that the money would also enable it to recruit an additional 50 technology staff members between then and 2020 – in addition to the 89 staff it already employed across the UK and worldwide.

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On securing the funding, Heslop had stated that “the general move to cloud-based services across all industries continues to drive exceptional growth opportunities” for the company.

The company experienced a period of rapid growth as a result of significant new contract wins over the past two years, and forecast this trajectory to continue during 2019 and beyond. Unfortunately, during the second half of 2018, certain contract delays coupled with the mixture of work secured, meant the company generated lower gross margins than forecast, resulting in monthly losses and cashflow pressures.

The business sought to alleviate this via cost control measures and launched a process to secure additional investment, which would support the next phase of growth and further stabilise finances. This proved to be unsuccessful and, with no other sources of funding available, the directors resolved to place the company into administration.

Upon appointment, KPMG made 94 of the company’s 109 employees redundant with immediate effect. The 15 remaining employees have been retained to help the administrators to continue trade the network operation centre and provide multi-cloud platform services to customers.

Nimmo 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’re exploring a sale of the business and assets and would encourage any interested parties to contact us as soon as possible.

“Additionally, we’re working with Scottish Enterprise and Skills Development Scotland to provide a full range of support to the company’s employees throughout this process.”

Hutchinson Networks project manager, Dan Barnes, posted on LinkedIn: “It’s a sad day for many as Hutchinson Networks have gone into administration. As such myself, as well as a hundred-plus others, now find ourselves seeking other employment.”

A wide range of IT professionals, including remote support technicians, network engineers, solutions architects, cloud professionals and Sysadmins, have now found themselves out of work due to the company’s collapse.

He said: “I would love to put the right people in contact with each other and help everyone to land on their feet.”

Duncan MacRae


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