City Link makes 2356 staff redundant

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.LONDON (AP) — Administrators of City Link, the collapsed British parcel delivery firm, say more than 2,300 people are losing their jobs after a bid to buy the business fell through.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.Hunter Kelly, joint administrator, said: “It is with regret that we have to announce substantial redundancies at City Link Limited, which ceased accepting new parcels on December 24, 2014.

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. The consortium, despite attempts to make them reconsider, declined to amend their original offer.” The business’s controversial collapse attracted criticism when staff learned of the administration and their likely redundancies on Christmas Day.

It subsequently emerged that owner Better Capital, which bought City Link for £1 in 2013, stood to recoup around £20m from the business after structuring its investment in the company as a secured loan. On Monday, Better Capital said it hoped to recoup as much as £20m through the administration process, which it based on the value of outstanding trade debtors and the sale of automated parcel sorting equipment within City Link depots. “Most of our deals are financed this way, it is not unusual for the industry,” he said. “Would we have done the deal if the investment was in equity and not secured?

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.

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