British phone maker Wileyfox enters administration

Hurting for funds, Wileyfox, the UK-based maker of budget Android phones, went into administration Tuesday, CEO Michael Coombes confirmed.

"The purpose of the administration is to restructure the Wileyfox Group, reduce its cost base in Europe and to ensure its long term future across all the markets it operates in," Coombes said in an email. The process is similar to bankruptcy proceedings in the US.

A company employee had broken the news on Reddit earlier. Verified Reddit user Wileyfox-Jack, who used the forum to provide support to Wileyfox customers, said Andrew Andronikou and Andrew Hosking had been appointed joint administrators.

Andronikou and Hosking, who work for business advisory firm Quantuma, confirmed in an email that Coombes had called them in. Andronikou said Wileyfox hit major funding issues when its Russian backer was restricted from lending money abroad by the Central Bank of Russia.

Six core staff remain at the company to help the administrators assess whether the business can remain viable, while 20 others have been made redundant.

"We are looking at prospective interested parties to buy the goodwill and IPR associated with the business to take forward the operations in Europe," Andronikou said.

With new funding options and potential buyers being explored, this isn't necessarily the end for the startup, which launched in 2015 with the aim of making highly affordable 4G phones. Over the last three years the company launched eight different devices, under the names Swift, Storm and Spark. The first two generations of Wileyfox phones ran the now-discontinued Cyanogen operating system, with the latest generation running Android.

Wileyfox's phones were mostly well received, but that wasn't enough to keep the company afloat in a crowded market. With such small margins, the startup has had a tough time competing with global tech giants and Chinese manufacturers like Huawei and OnePlus, which also offer budget 4G devices. It comes as little surprise that Wiley Fox ran into difficulties, said CCS Insight analyst Ben Wood.

"The market has moved away from them since they launched the brand in 2015," Wood said. "The challenges were likely compounded by problems getting funding from the company's Russian backers, and significant increases in the cost of components, which would quickly swing a smartphone maker with very narrow margins into a loss making position."

Wileyfox-Jack said on Reddit that phone updates will no longer be pushed out and that he couldn't comment on repairs and warranties, which are now in the hands of the administrators. Coombes said the phone maker would do its best to support existing devices.

"The Wileyfox Group is committed to working with partners, distributors and customers in Europe to ensure, as far as possible, uninterrupted support and service for Wileyfox mobile handsets in the market," Coombes said. If the company were bought, said Andronikou, that would provide any existing Wileyfox phone owners with all ongoing service and customer care. 

"Today is a sad day not just because I lost my job but because I believed in the Wileyfox brand," Wileyfox-Jack said on Reddit. "As for hopes of restructuring/buy-outs happening [...] I am doubtful, but if anyone out there has some cash to spare, please go ahead and buy Wileyfox. I liked working there."

First published Feb. 7, 11:17 a.m. PT
Update, 12:01 p.m.: Adds comments from Coombes; 12:07 p.m.: Recasts top of story.

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