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City Link owner 'disappointed' at administration City Link owner defends handling of firm's administration
(about 1 hour later)
The owner of collapsed UK parcel delivery service City Link says it is "disappointed" the firm has been placed into administration. Jon Moulton, the founder of Better Capital, which owns collapsed UK parcel delivery service City Link, said the firm's administration could not have been handled any better.
Investment firm Better Capital, which owns City Link, said the appointment of an administrator had been leaked early to the media. News of the collapse was announced on Christmas Eve, but Mr Moulton said the timing could not have been avoided.
It said "the directors very much regret the impact" on staff of finding this out on Christmas Day. More than 2,000 City Link staff are expected to be made redundant from the firm on New Year's Eve.
More than 2,000 staff are expected to be made redundant on New Year's Eve. City Link customers are being urged to collect parcels from depots on Monday.
Better Capital, in its first statement since the firm went into administration, said it had tried various options to "maximise" its investment in City Link, including an unsuccessful attempt to sell the business. "We chased every possible way to save this company," Better Capital founder Jon Moulton told Radio 4's Today.
Mr Moulton said delaying the closure of City Link over Christmas had not been an option, as trading while insolvent was a criminal offence.
He also defended criticism that taxpayers would end up paying for City Link staff's redundancy following administrator Ernst & Young's (EY) statement that it would refer employees to the government's statutory redundancy payments scheme.
Personal loss
"I don't think the taxpayer is going to end up footing much of a bill on this," he said, saying that City Link had paid "a fortune" in taxes such as PAYE and said ultimately the government would be a net beneficiary of Better Capital's investment in the firm.
"We are looking after money that has been given to us to invest, we are in the business of trying to make money for our investors," he added.
Mr Moulton, a multi-millionaire, said he personally had lost £2m on the firm's investment in City Link.
Better Capital, in its first statement since the firm went into administration, said earlier on Monday that it had tried various options to "maximise" its investment in City Link, including an unsuccessful attempt to sell the business.
"In light of continued substantial losses, City Link could not continue as a going concern," it said."In light of continued substantial losses, City Link could not continue as a going concern," it said.
Talks between union officials and administrators Ernst & Young were held on Saturday afternoon. City Link, which was founded in 1969, was acquired by restructuring specialist Better Capital in April 2013.
EY confirmed "substantial redundancies" were expected "over the coming days". Parcel collections
On Friday, administrators Ernst & Young confirmed "substantial redundancies" were expected "over the coming days".
The firm also said parcel depots would "remain open for a short period of time" to enable customers and intended recipients to collect their parcels.
It advised customers to use City Link's online tracking system to find out which depot to go to.
Coventry-based City Link employs 2,727 people.Coventry-based City Link employs 2,727 people.
It called in administrators on Christmas Eve after years of "substantial losses".It called in administrators on Christmas Eve after years of "substantial losses".
'Smashed to pieces' Following talks with EY on Saturday, transport union RMT demanded an immediate meeting with Business Secretary Vince Cable and called on the government to launch a rescue plan to save the company as a going concern.
Following Saturday's talks, transport union RMT demanded an immediate meeting with Business Secretary Vince Cable and called on the government to launch a rescue plan to save the company as a going concern.
The union said it had been told by administrators that more than 2,000 staff will be made redundant on New Year's Eve. Remaining staff will be retained in the short term to wind down the company, union officials said.The union said it had been told by administrators that more than 2,000 staff will be made redundant on New Year's Eve. Remaining staff will be retained in the short term to wind down the company, union officials said.
Mick Cash, RMT general secretary, called the situation a "despicable and callous manipulation" of thousands of workers.Mick Cash, RMT general secretary, called the situation a "despicable and callous manipulation" of thousands of workers.
He said: "It is crystal clear that there has been a truly horrific catalogue of mismanagement at City Link and that staff and their union have been starved of basic information."He said: "It is crystal clear that there has been a truly horrific catalogue of mismanagement at City Link and that staff and their union have been starved of basic information."
The government has previously said it was unable to intervene in the administration process, although Mr Cable said he would meet the union in the New Year.The government has previously said it was unable to intervene in the administration process, although Mr Cable said he would meet the union in the New Year.
However, Mr Cash said: "Clearly that is too late and the business will have been smashed to pieces by then.
"If the government can nationalise the bankers then they can nationalise City Link, which is clearly in the public interest," he added.
The firm, which was founded in 1969, was acquired by restructuring specialist Better Capital in April 2013.
It invested £40m but EY said City Link had incurred substantial losses over several years and the money could not help it turn the firm around.
'Substantial redundancies''Substantial redundancies'
On Friday EY said it was currently assessing the company and the status of existing orders.On Friday EY said it was currently assessing the company and the status of existing orders.
"This process will have a bearing on the number of employees retained and those that unfortunately face redundancy in the next few days," it said in a statement."This process will have a bearing on the number of employees retained and those that unfortunately face redundancy in the next few days," it said in a statement.
"It is anticipated that there will be substantial redundancies over the coming days, at which point the administrators will provide a further update.""It is anticipated that there will be substantial redundancies over the coming days, at which point the administrators will provide a further update."
It said it anticipated that "a portion of employees" would be retained for up to three months.It said it anticipated that "a portion of employees" would be retained for up to three months.
Administrators were currently gathering expressions of interest from parties interested in acquiring specific assets, divisions of the business or the entire firm, it added.Administrators were currently gathering expressions of interest from parties interested in acquiring specific assets, divisions of the business or the entire firm, it added.
But given the previous unsuccessful sale process administrators were "cautious about the prospects of finding a buyer", the statement added.But given the previous unsuccessful sale process administrators were "cautious about the prospects of finding a buyer", the statement added.