ParcelHero says it's shocking that taxpayer may have to foot City Link redundancy bill
Industry expert Roger Sumner-Rivers criticises handling of City Link administration announcement
Following the announcement on Christmas Eve that City Link is being placed into administration by Better Capital, the company that purchased City Link from Rentokil Initial for £1 in 2013, leading UK Courier ParcelHero’s founder, Roger Sumner-Rivers, says the timing of the announcement is shocking, as is the fact that Government may have to foot the bill for the 2,700 employees who are being made redundant. Ernst and Young told the Financial Times that employees would be referred to the government redundancy payment scheme because ‘the company is insolvent and unable to meet these payments’ following over £178 million losses since 2009.
Additionally it’s now almost certain the thousands of City Link drivers, who acted as sub-contractors and were not employed by the company, will be treated as creditors and not be paid for December.
John Moulton, founder of Better Capital, has refused to apologise for placing the company into administration on Christmas Eve. Moulton said ‘I don’t feel any need to apologise for the process that we’ve followed.’ The RMT General Secretary Mick Cash accused Mr Moulton of ‘wrecking’ lives while Chuka Umunna Shadow Business Secretary, called it ‘unacceptable’.
Leading UK Courier ParcelHero’s founder Roger Sumner-Rivers commented: ‘It is shocking that the management team at Better Capital left it till Christmas Eve to announce City Link’s closure, then don’t even have the guts to apologise to the thousands of people who have lost their jobs, or to the British taxpayer who is likely to have to foot the £5-10 million redundancy bill.’
It also looks probable that Better Capital will be able to recoup some of its losses. In a statement, Better Capital announced that they had written down the value of its £40 million loan by 50%:
‘The 2012 Fund's investment in City Link was structured as secured capital loans to protect its interests in such a process. While the Company's interim valuation of the 2012 Fund reflected an estimated liquidation valuation basis as at 30 September 2014, this estimate is inevitably subject to modest uncertainty and to the effects of intervening trading. The ultimate outturn is currently expected to be reasonably close to the 30 September valuation’
As Better Capital is considered a ‘secured creditor’, it will therefore be able to recoup its ‘loan’ ahead of employee salaries.
On Sunday, Mr Moulton said competition had become increasingly intense in recent months, blaming low-cost competitors. Roger Sumner-Rivers said: ‘I find it staggering that Mr Moulton is blaming competition for the firm’s demise when the market has been growing rapidly for a number of years due to the growth in e-commerce. It’s very clear to me that the failure of City Link’s management to invest in IT, alongside failing to integrate their acquisitions and reduce the number of depots they operate, has been instrumental in their demise’
Today, City Link customers are starting to collect the estimated one million outstanding packages from City Link depots across the country. If you need to recover a parcel from City Link you should first track the parcel on the City Link website to establish its location, then call City Link on 0844 4930932 to confirm the parcel is now available for collection. Please note - if you have sent an international shipment with City Link, your parcel will not be available for collection today. You should call City Link and establish when it will be available to collect. Customers are advised to not leave it too late to collect their parcels as it’s still unclear how long the depots will be open, and if you don’t collect in time, you may be unable to recover your parcels.
For more information see: www.parcelhero.com
For more information please contact David Jinks, Head of PR, on david@parcelhero.com or by phone on 0208 7584962 (07772 055748 out of office hours)
Leading international online courier ParcelHero® strategically partners with the world's leading, logistics companies, including DHL, UPS and DPD to provide a flexible, cost-effective range of parcel delivery services to over 220 countries worldwide. Huge bulk purchasing power allows ParcelHero® to offer highly competitive pricing with no compromise in service quality.
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