Security shop Adarma ceases trading, confirms it will enter administration
Former staffers of struggling UK biz say they don’t expect to be paid for July
UK cybersecurity shop Adarma has confirmed it has entered administration.
Will Wright and Alistair McAlinden of Interpath Advisory were appointed as the joint administrators, per a statement displayed on its website. Except for the statement itself, the rest of the website has been pulled offline.
According to staff who spoke to The Register on condition of anonymity, employees were told on Monday that if they had not heard otherwise, they could consider their roles terminated with immediate effect.
One now-former staffer said an urgent meeting was called at 1300 UK time on July 10 with only 30 minutes' notice, in which Adarma announced its notice of intent to appoint administrators, and that clients were aware of the news.
Client director Ross Lockerbie-Tyrrell had noted this on LinkedIn: "I genuinely loved this business – the work, the value we add, and most of all, the people. I'm so proud of what we achieved together, and so grateful for the trust of our customers and the friendships I've built along the way."
Senior execs told staff during the meeting that one of its investors, Livingbridge, pulled funding around three months prior to the administration announcement owing to Adarma's loss of some major contracts. As a result, it was struggling financially, and redundancies were likely.
Staff were greeted with an email the next morning, July 11, instructing them to keep working, and a follow-up email at midday repeating the key points from the meeting the day before.
Adarma scheduled an urgent meeting at 1730 on Monday, July 14, at which point staff were told that Interpath was appointed to handle the company's administration earlier that afternoon.
An insider said Adarma's CEO, Chris Shaw, who has already indicated via his LinkedIn page that his time with the business has ended, told employees that bids for the company were made over the weekend, but applicants were only interested in the client list, which was shrinking rapidly as word of the troubles spread.
"Clients had been approached to cover the cost of continued operation with some success in principle, however, as clients withdrew, cost increased for the other clients, which snowballed until no client was willing, or perhaps could afford, the costs," said a source.
After the meeting, employees in England and Scotland were sent a redundancy pack [PDF] via email, detailing how the process works in the UK.
As of Tuesday, former staff members' network access was revoked. A message on company Macs read: "This device has been locked by Interpath, joint administrator for Adarma Limited."
An Interpath spokesperson told The Reg: "The Directors had pursued a formal sale process to secure fresh investment after the business had faced growing financial pressure after losing a major customer and had subsequently made steps to reduce its cost base. However, without a solvent funding option, the business was not in a financial position to continue trading and the Directors were left with no choice but to place the company in administration."
The spokesperson went on to confirm that 173 staff were made redundant. They added: "The remaining staff have been retained to assist the administrators with their duties. The Joint Administrators will now focus on supporting impacted staff as they wind up the business."
Those 173 employees at Edinburgh-based Adarma were spread across Scotland and England.
According to Livingbridge's profile page for the company, the private equity firm invested in the security shop in 2019.
It states that Adarma's top 20 clients had a combined annual turnover in excess of £150 billion ($200 billion), and according to a company rate card hosted by gov.uk, it charged between £740 ($990) and £2,380 ($3,186) per product per day.
Adarma offered a wide range of security services, including a fully managed security operations center, bespoke security use case development, and managed data analytics.
Insiders told us they are not expecting a pay packet covering the period from July 1-14, and said anything owed will be issued via the redundancy payment service. Outstanding overtime pay is also not expected to be honored.
All staff received their pay for the previous month on June 30.
Will Wright, UK CEO at Interpath and Joint Administrator of Adarma Limited, said: "Adarma had built a strong reputation in the cyber security sector, but sustained margin and cashflow pressures ultimately proved insurmountable. Like many in the industry, the business faced intense competition, rising operational costs, and a continual need for investment."
Wright said the decision to cease trading was made because of Adarma's "financial position," adding: "Our team is working closely with affected employees to support them through the redundancy process, including assistance with applications to the Redundancy Payments Office." ®