The collapse of City Link has placed over 2,700 direct jobs at risk as well as impacted upon the future for its 1000+ sub-contractors. The parcel delivery business entered administration at close of business on Christmas Eve having officially appointed EY earlier that day, having worked with its team for well over a month to seek a way forward. From reports coming in, however, the business did not inform staff of its actions and many learned of the position via news broadcasts on Christmas Day. This has riled the RMT union which is condemning both City Link directors and EY for their failure to consult with employees. The RMT claims that the business deliberately withheld the news of its insolvency which was planned to be announced on Boxing Day but that this had been brought forward when a City Link employee leaked the news to the union..
An announcement on redundancies is expected this week, meanwhile a skeleton staff is operating its tracking system and customer help lines as well as enabling customers to retrieve parcels which had not been processed.
The loss-making business had been acquired by Better Capital from Rentokil for £1 and Better Capital had invested some £40 million in its efforts to achieve a turnaround. However City Link recorded a loss of £14 million for its 2013/14 financial year. It has been emerging that both Royal Mail and DX had been in talks with directors of City Link early in December about a potential deal for parts of the business, but that the talks had not led to any firm offers. It is however believed that DX will be tabling an offer to the administrators for certain assets.
For its part, Better Capital is reported as blaming the failure on “excess (and increasing) capacity in the sector, made worse by customers developing their own delivery capabilities.” This flies somewhat in the face of sector thinking which is that there is too little capacity and a national shortage of drivers to meet growing demand. This points to there being good opportunities for City Link employees and sub-contractors to secure alternative work.
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