FTI to administrate Utilitywise with 1,000 jobs on the line

15 February 2019 Consultancy.uk 4 min. read
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Energy-focused professional services firm Utilitywise has collapsed into administration, following allegations of years of mismanagement from a number of staff. FTI Consulting will oversee the process, with around 1,000 staff potentially facing redundancy at the Newcastle-based company.

With an increasingly costly utilities sector pricing many consumers into debt for the bare necessities of power and water, the UK’s market has often been criticised for forcing many consumers to “choose between heating and eating”. In this environment, it is not hard to understand why companies might see this as a window of opportunity to provide advisory services to individual customers and businesses frustrated with the expensive process of keeping their electricity, heating and water running.

Utilitywise was one such professional services firm, which sought in its mission statement to “help people build better businesses by being smarter with their energy and water.” While this presented the firm with the chance to tap into a lucrative market, however, it emerged in January 2019 that the firm had accrued substantial debts, stating it needed £10 million to keep its business afloat. The firm cited coming up against "unexpected challenges and legacy issues" as the root cause of its crisis.

FTI to administrate Utilitywise with 1,000 jobs on the line

Despite a last-ditch rescue bid by the Newcastle-based company's founder, Geoffrey Thompson – who stepped down from the board two years ago after building the firm into a multi-million-pound business listed on the AIM stock exchange – extensive discussions with the group’s largest shareholders and other stakeholders were unable to secure the consultancy’s future. With the Directors of Utilitywise unable to raise sufficient funding to cover trading losses and implement the turnaround strategy, a sale was mooted by the board at the end of January.

The sales process did not result in any offers to acquire the group as a whole, or its constituent parts. Consequently, the firm has fallen into administration. The energy broker has appointed FTI Consulting to handle the administration process and said its energy brokerage business would stop trading immediately – though its other subsidiary companies will continue trading while buyers for those parts of the group are sought. FTI’s Andrew Johnson and Chad Griffin will oversee the process as joint administrators.

The news sees roughly 1,000 jobs put at risk in the North East of England, with many employees expecting redundancy. According to reports from regional paper The Newcastle Chronicle, dozens of workers at the firm have already contacted the press to say that hundreds of people have lost their jobs at the company’s Cobalt headquarters.

“Always worrying about redundancy”

According to reviews from staff published on employment site Glassdoor, staff had been aware of problems at the firm for some time. While virtually all reviews cited friendly co-workers as a pro at the firm, the majority also condemned the way the firm was run. One sales processor wrote that there were “always problems going on within the business, also has had some bad press. Always worrying about redundancy.”

Another, a former Energy Consultant with Utilitywise, pulled no punches, suggesting that staff were provided with “awful data”, and alleged that leads to consultants were “distributed unfairly”. This seems to be part of a running theme in the feedback from staff at the company, many of whom suggest a boys-club-style culture of nepotism held the company back. The previously mentioned review suggested that there were “obnoxious, rude, unprofessional senior staff” at the firm, and advised management to “stop promoting inexperienced 'mates' and recognise capable leaders with the right skillset.”

An Ops Manager based in Newcastle-upon-Tyne added they believed the firm’s “terrible board” were responsible for its downward spiral. They suggested the board was “scrambling around trying to understand what’s going on in the company”, was overly focused on its “social media profile”, and had “no real idea of the industry” while citing abstract concepts such as “legacy” for the issues the firm encountered. The employee also described HR management as “awful”, noted the firm allowed “too many highly paid people who have no clue what’s happening and really don’t care”, and concluded, “How much longer we’re all asking?”

Related: FTI to advise on restructuring as Claire's files for bankruptcy.