Shifting its "high level customer service agents" from the UK to Hungary was instrumental in the failure of Misco UK, according to the administrator's report.
In October, CEO Alan Cantwell told CRN that entering the firm into administration was the only option after HMRC turned the screw on the firm and a last-ditch attempt to sell key assets came to nothing.
An administrator's report on why Misco UK failed has now cited its outsourcing activities as a major factor and unveiled a total debt to creditors of £21.8m.
While the £21.8m debt was spread across 1,037 parties, distributors Exertis and Westcoast were among the most exposed channel firms. Exertis is owed over £7.3m and Westcoast is listed as a £7.6m creditor.
"The Company [Misco UK] expanded its focus on the sale of maintenance and service contracts to its customers alongside its historic reseller business," the report stated.
"The large majority of back-office functions were moved to a sister company in Hungary, this included its high level customer service agents.
"In the following years the business continued expansion attempts with offices in central London and Manchester opening and closing between 2012 and 2015."
The report goes on to note that turnover fell from £310m in 2012 to £220 in 2015, and throughout 2016 turnover continued to fall to £178m.
"The sharp decline in sales was attributed to over-expansion and capital costs associated with the same. This was coupled with a shift in focus from historic reselling to maintenance and services contracts and removal of the UK-based customer service team with expert knowledge."
The administrator's report continued that in March 2017 Hilco provided funding, via its lending arm, for a management buy-in of the business and provided restructuring expertise and resource to the new management to "enable them to implement a turnaround plan".
"Shortly after the Hilco backed acquisition, the Company's [Misco's] preferred credit terms with significant suppliers were reduced substantially by a number of credit insurers, putting significant pressure on cash flow," said the report.
It stated that as Misco's financial difficulties worsened and the directors engaged administrators FRP in June, potential suitors for the business were courted without success.
On 18 October, CRN reported that US reseller giant PCM was locked in rescue talks to buy all or parts of Misco UK, but no deal could be reached.
Both Exertis and Westcoast were approached by CRN for comment. Westcoast declined to comment, while Exertis did not immediately respond.
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