City Link Collapse Prompts Parcel Stampede and Loss of 2,000 Jobs

City Link Collapse Prompts Parcel Stampede and Loss of 2,000 Jobs
The collapse of City Link, announced on Christmas Eve, has left more than 2,700 employees facing the prospect of entering 2015 with no job.

The founder of the parent company of the insolvent delivery firm City Link has denied claims that the disastrous timing of the firm’s collapse could have been avoided. News of the company’s failure broke on Christmas Eve, leaving 2,000 staff facing redundancy and thousands of more customers without their parcels.

On Boxing Day, the firm’s administrators released a statement which warned of “substantial redundancies over the coming days”. They also said City Link’s remaining 53 UK parcel depots would “remain open for a short period of time to enable customers to collect parcels”.

The firm has also not ruled out the possibility that some parcels may be destroyed if customers do not claim them.

The timing of the collapse could not be avoided

City Link was founded in 1969 before being bought by Jon Moulton’s venture capitalist firm, Better Capital, in 2013. Speaking on BBC Radio 4’s Today programme, Moulton claimed the disastrous timing of the firm’s collapse could not have been avoided.

He explained that the firm’s directors and administrators had explored every possible avenue to save the company, but breaking the news any later was not an option as trading while insolvent is a criminal offence.

However, news of the inevitable redundancies the firm’s collapse would bring was only broken to staff after rumours about the state of the company’s financial affairs began to circulate.

Unavoidable redundancies before the turn of the year

Asked about the cost of the company’s collapse, the veteran venture capitalist was quick to claim that the taxpayer would not be left to foot the bill for redundancy payments, as City Link had “paid a fortune” in taxes since the takeover by Better Capital in April 2013.

Thousands of employees are now facing the prospect of redundancy on New Year’s Eve after the company’s administrators were unable to agree on a deal with trade union bosses to save their jobs.

The National Union of Rail, Maritime and Transport Workers (RMT) has turned to the business secretary Vince Cable for help, asking him to step in and rescue the company. However, Moulton has said the Department for Business, Innovation and Skills was aware of the company’s collapse before Christmas and did not request a meeting.

A “horrific catalogue or mismanagement”

The RMT has also accused City Link directors of a “horrific catalogue of mismanagement” in the lead up to the delivery firm’s collapse. Asked on the Today programme whether the company’s insolvency and subsequent failure had been botched, Moulton replied: “Not particularly, no. First of all, I must say on behalf of Better Capital and its board of directors that we are very sorry about the failure and the horrible effects that follow for the workforce and the contractors.

“I’m afraid that is the result of the company failing, nothing more and nothing less. The company was not viable.”

Moulton was quick to stress that the company’s directors did everything they could to save City Link and would have been guilty of a criminal offence if they had not filed for insolvency when it became clear “a couple of days before Christmas” the firm could not be saved.

Years of substantial losses

The announcement that City Link was entering into administration has come after years of substantial losses. The company’s bosses, administrators and union officials have met in Leeds to discuss the fate of the firm’s 2,727 employees, with union officials vowing to remain in talks for as long as it takes to salvage jobs.

The firm was purchased by Jon Moulton’s investment firm in 2013 for just £1 from the previous owner, pest control firm Rentokil. A handful of staff will now be kept on to return parcels to customers and help with the process of winding down the company.

If you are considering administration and would like more information call 08000 746 757 and speak to someone in confidence.

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