An IT services company hosted on UKCloud, the cloud service provider placed in compulsory liquidation on October 25, has complained of an increase of more than 700% in its costs while the company is in liquidation.
A small business executive, who asked to remain anonymous, said Computing the huge increase in hosting fees was only communicated by EY, the company appointed by the official receiver as special director overseeing the liquidation process, on November 7. The new prices apply throughout November and until the final liquidation of UKCloud, scheduled for early December.
The fee imposed by EY will amount to an additional £100,000, which the executive says would be hard to come by.
The executive said he was not made aware of UKCloud’s terminal financial issues through any official channel and had no time to plan. Under the terms of the company’s contract with UKCloud, 30 days’ notice is required for any price changes. However, all bills, including raise fees, must be paid by tomorrow, November 18.
“They didn’t give us 30 days, they actually gave us less than seven days,” the executive said. “Nobody’s looking for a freebie, but we’re not expecting a 700% fee increase and something. These prices are completely out of the market and it’s hard to find that money. And really, why should we ?”
EY told the company that additional fees were levied to minimize UKCloud’s losses, but the executive questioned the fairness of collecting UKCloud’s debts through its customers.
“It looks like we are being punished for the mismanagement of a business over which we have no control,” the executive said, adding that he understood that many other UKCloud customers in the public and private sectors were also affected.
“Some organizations may be able to swallow these inflated prices, but we cannot, and we cannot pass them on to our customers.”
Concern for continuity of service
A bigger concern, the executive said, is the possibility that the service could be retired entirely before the migration to a new cloud service provider is complete. The company originally planned a controlled migration as taking three months, but it was now happening at a forced pace. NHS England and the Cabinet Office assured the company they would have six weeks, but after discussions with EY the company was not reassured.
“They make that request, and they’re not saying ‘this service will continue’, they’re saying ‘if you don’t pay for it, we can’t guarantee that the service will continue’.”
The company has paid all bills due under the existing terms and has taken legal advice on what to do about the additional charges.
At the time of UKCloud’s liquidation announcement, the government said: “We are regularly monitoring the health of key providers and have contingency plans in place to ensure the continuity of public services.” However, as an NHS provider, whose patients would be affected by any closure, this did not appear to be supported by the lack of guarantees offered by EY to keep services running, the executive said.
The Cabinet Office guarantees EY for any losses it may suffer between October 25 and December 6, but after that the situation is unclear. It is possible that UKCloud will be acquired at this time or the liquidation period may be extended. The government department is in favor of EY charging inflated fees to UKCloud customers to minimize losses from the defunct provider, the executive concludes, after discussions with the department.
“Indeed [the Cabinet Office] told me it was a move by EY and the Cabinet Office supports it because otherwise it is more likely that EY will seek this funding.”
The Office of the Official Receiver declined to comment on the inflated fee, citing “commercial confidentiality”, but they assured the services would continue.
“In its role as liquidator of UKCloud, the Official Receiver is an independent charge holder and is responsible for ensuring that the costs of providing continued services to UKCloud customers are covered. The amounts charged for the continued provision of services are scheduled on a regular basis. Official Receiver and Special Managers engage with all clients to enable the continued provision of services.”
Computing also contacted EY but had not received a response at the time of publication.
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