City Link administrators begin selling off collapsed parcel carrier’s assets
|
Version 0 of 1. The administrators of the collapsed parcel carrier City Link have started selling off the company’s assets. And the rival firm DX has paid just over £1m for some of its equipment and intellectual property. “This transaction represents our first step in realising the value of City Link’s assets,” said Hunter Kelly, one of the administrators. “We will continue this process over the coming weeks, alongside conducting an orderly wind down of the company’s operations.” City Link was a high-profile Christmas casualty. The restructuring experts Ernst & Young were appointed on Christmas Eve and many of the staff learned of the company’s fate on 25 December with 2,356 of the 2,727 employees then made redundant on New Year’s Eve. The collapse also took away the livelihood of 1,000 self-employed drivers and third-party workers who helped deliver the company’s service. Ernst & Young said it had agreed to sell a lot, which included cages and scanners, as well as certain intellectual property aspects, to DX, the logistics and mail group listed on the AIM stock market in London. DX’s chief executive, Petar Cvetkovic, described the move as a limited investment. “It is very sad that City Link has been unable to continue as a going concern, particularly for its employees and contractors. We are also doing all we can to provide opportunities for former City Link employees and contractors, and to offer solutions to customers who may need a new carrier.” City Link was one of the companies owned by the private equity firm Better Capital, led by the veteran venture capitalist Jon Moulton. Better Capital bought the troubled courier group for just £1 in April 2013 from the previous owner, the pest control firm Rentokil, but was unable to forge a path for the loss-making business. Moulton has told shareholders that Better Capital expects to recoup about half the £40m it had invested in City Link over the last 18 months. In the autumn Better Capital wrote down the value of its investment to £20m – a figure based on how much it would recover if the business were liquidated, a process that has now begun. Speaking in the wake of City Link’s collapse, Moulton said the business could not survive. “We’re very sorry about the horrible effects that follow for the workforce and contractors. I’m afraid that is the result of the company failing, nothing more and nothing less. The company was not viable.” City Link has limited assets to sell, as the bulk of the company’s sites, which included four transport hubs and 53 smaller depots throughout the UK, are leased. Industry sources suggested the lion’s share of the funds collected by the administrators would come from its customers, including the retailers John Lewis and Mothercare, settling their accounts. DX, as well as other rival carriers such as UK Mail, Royal Mail and DPD, are among those picking off City Link’s former clients. The administrators said they were continuing to work on realising the value of the remaining assets, which included IT systems, machinery and leasehold properties, as well as the firm’s debtor book. Mick Cash, general secretary of the Rail, Maritime and Transport union, said it was clear a fire sale had begun. “It is outrageous that the union is being denied a meeting and proper consultation with the administrator when there is a chance to rescue jobs,” he said. “We are calling again for direct talks with all of those pulling the strings, including the business secretary, Vince Cable, and the government, to see just what can be done for the thousands of workers left facing personal ruin.” |