City Link announces 2356 job losses after rescue talks fail

31 Dec 2014 | Author: | No comments yet »

City Link makes 2,356 staff redundant.

LONDON (Reuters) – A total of 2,356 employees of collapsed British courier and parcel firm City Link will be made redundant after talks over a potential life-saving bid for the company fell through, administrators said on Wednesday.Failed delivery firm has confirmed that it will make 2,356 staff redundant with effect from 31 December following its collapse into administration on Christmas Eve. Coventry-based City Link, which pest control-to-hygiene group Rentokil Initial sold to private equity firm Better Capital for 1 pound last year, had long been losing money. It said the remaining 371 people had been retained to deal with parcels that are still within the company’s network and to help wind down operations.

An offer had been made by a consortium which offered no money up front and “significantly undervalued” the assets to be acquired, Hunter Kelly added, without identifying the potential buyer. “The administrators proposed an alternative structure that would be acceptable and common in these situations,” it said. “The consortium, despite attempts to make them reconsider, declined to amend their original offer,” it added. Better Capital had financed its £40m investment into the delivery company as a secured loan, meaning it will rank as a secured creditor in the administration process, ahead of staff who count as preferred creditors. I doubt we would have invested as much — so no, probably not.” EY is now working to establish the amount owed to creditors, with proposals to them due within the next eight weeks.

City Link had struggled for years with deep-rooted operational problems, such as inefficient route-planning, arising in part from poorly-integrated acquisitions. Trade unions reacted angrily to news of the redundancies, having lobbied the business secretary Vince Cable to consider a state-backed rescue of the company.

The RMT union, which organised a protest at City Link’s Coventry headquarters on Wednesday afternoon, denounced the company’s owners as “greedy speculators”. “This despicable and callous treatment of an entire workforce by greedy bosses who are able to fold a company on Christmas Day, protect their own money and leave the taxpayer to pick up the redundancy bill exposes the cosy relationship between bandit capitalism and the political elite,” said Mick Cash, RMT general secretary.

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