Union leaders push for forensic investigation into business failure

Union leaders have called for a forensic investigation into the collapse of parcel delivery firm City Link after the company, which had 2,727 employees across the UK, called in administrators after years of “substantial losses”.

City Link entered administration towards the end of December, with many workers finding out they were being let go on Christmas Day itself and around 2,300 people were made redundant on New Year’s Eve. So far the administrators have sold partial assets from the defunct courier service, raising £1.125m to help pay off its creditors, which includes a £20m debt owed to private equity owner Better Capital, which owned City Link, having bought the firm in 2013 for just £1. 

Chairman of Better Capital, Jon Moulton, has had to face a joint select committee this week and has angrily denied accusations that City Link might have broken the law by trading while technically insolvent. Mr Moulton also dismissed claims City Link had been kept running up to Christmas so it could make as much as possible during the busiest part of the year.

When asked by the Committee whether the Government should have been told earlier about the impending collapse, Mr Moulton claimed he had flagged up City Link’s insolvency as a “serious possibility” in an email to BIS on 19 December and on 23 December, BIS was told that the company was “almost certainly” going into administration the next day.

Author: Roger Isaacs, 2 February 2015

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