US and UK arm of Sungard enters bankruptcy – what does this mean for their customers and their business contingency plans?

Cloud and datacenter service provider Sungard Availability Services has filed for bankruptcy both in the US and for its Canadian subsidiary, just weeks after its UK division was forced into administration.

Offering IT production and recovery services that include IT infrastructure, Cloud computing, Disaster recovery and Workplace recovery, Sungard blamed its insolvency on a high rise in energy bills and failure in renegotiating landlord rental rates. Sungard in the UK had contacted customers in December to “recover increased electricity costs” related to colocation kit or other services, however, they were met with some backlash from some who refused to pay these increased costs.

In the US, the Sungard Chapter 11 declaration filing disclosed that Sungard currently has about $423 million in funded debt.

The US company blamed challenges in their capital structure, the Covid19 pandemic and other economic trends such as delayed customer’s delaying spending decisions, reductions in IT expenditure, energy price increases, and a lowering in demand for their services.

With this news comes a glimmer of hope that if customers using Sungard had appropriate business contingency plans in place to ensure that should something like this situation ever did occur, their IT services would not be impacted. As a software escrow vendor, this news speaks volumes of how important it is for businesses in the US, UK, and worldwide, to ensure that they have robust business continuity plans in place for their critical software applications. Software escrow agreements are set up to provide comfort to the end user that if the software developer is unable or unwilling to support the software, the source code, deployment scripts, databases and other vital components can be released to them and business operations can continue as normal.

Sungard clients or companies that rely on solutions hosted by 3rd parties within a Sungard data centre still have time to coordinate a recovery plan while Teneo, the appointed insolvency administrators in the UK or the US company under chapter 11 develop a restructuring plan to find a buyer for the business.

There are a number of software escrow agreements that are available to businesses today, these include:

  1. SaaS Escrow Agreement
    A SaaS Escrow agreement is used for SaaS hosted applications within AWS, Microsoft Azure, GCP or private hosting vendor. Solutions typically include replicated environments with 90 days of live continuity, deposit of production environment access credentials and the deposit of all the components that are required to spin up a SaaS environment (i.e. source code, deployment scripts, databases).
  2. Single Beneficiary Agreement
    A Single Beneficiary agreement is made up of the depositor, beneficiary and the software escrow vendor as an independent 3rd party. A software escrow service agreement of this type is usually used when a client is licensing software from a developer. The agreement clearly outlines the release events and a guideline for the process should a release occur.
  3. Multi Beneficiary Agreement
    Multi Beneficiary agreements are used by a developer to provide comfort to their clients that they have a standing software escrow agreement in place. By having a Multi Beneficiary agreement in place, under a single agreement, the developer is able to add an unlimited number of beneficiaries to the master agreement.
  4. Data Holding Agreements
    Data Holding agreements are used when a company is using a developer to create a bespoke application and the beneficiary owns the intellectual property.

For further information on what Software Escrow services Escrow London provides, please click here.


About Escrow London

Escrow London is a global software escrow vendor headquartered in the United Kingdom. Our global coverage is provided across our London office, Escrow London North America Inc in Atlanta, and our Australian office in Sydney.

We have invested considerable resources into innovation to reinvent software escrow for a SaaS world. Escrow London provides a range of SaaS Continuity escrow solutions suitable for AWS, Microsoft Azure and Google Cloud Platform hosted SaaS applications. We support a wide range of clients includes major banks, central banks, insurance firms, technology companies and government.