Xmas Eve call to administrators
Parcel workers may learn fate on New Year’s Eve
EY said there would be “substantial redundancies” among the 2,727 because no buyer had come forward to take on the company. It is thought an announcement may be made on New Year’s Eve.
The company, owned by Jon Moulton’s Better Capital, called in EY yesterday, and stopped accepting parcels at more than 50 transport hubs and depots around Britain. It has depots in Aberdeen, Glasgow, Glenrothes, Livingston and Motherwell.
Operations will be suspended until Monday when customers and recipients will be able to collect their parcels.
But there is likely to be concern among customers and retailers as to how the collapse of the one of the country’s biggest parcels firms may disrupt deliveries, many of them from online services. It was founded in 1969 and John Lewis is believed to be among its biggest clients.
It faces increased competition from rivals, including Amazon, though critics have said that City Link failed to maintain up to date software and IT systems which have contributed to its problems.
Hunter Kelly, joint administrator, said: “City Link Limited has incurred substantial losses over several years.
“These losses reflect a combination of intense competition in the sector, changing customer and parcel recipient preferences, and difficulties for the company in reducing its cost base.
“The strain of these losses became too great and all but used up Better Capital’s £40m investment, which was made in 2013 and intended to help to turn around the company.
“Despite the best efforts to save City Link Limited, including marketing the company for sale, it could not continue to operate as a going concern and administrators were appointed.
“We will provide support to employees relating to potential redundancies. We are now beginning the process of realising the company’s assets.”
Better Capital, bought the courier and parcel delivery group last year from pest control firm Rentokil Initial for just £1.
Mick Cash, general secretary of the RMT union, said: “This is the bitterest blow any group of workers could receive on Christmas Day.
“RMT will do everything within its power to mobilise a political and industrial fight to save the thousands of jobs that have been put at risk as a result of this shock announcement.”
The union believes wages will be paid at least until the end of the year.
Scottish Business Minister Fergus Ewing said: “City Link’s collapse is a bitter blow for the firm’s staff and subcontractors and the timing of the announcement has clearly compounded that upset and uncertainty. My first thoughts are with City Link staff and their families, for whom this will be a very worrying time. I am also concerned about the impact this will have on other businesses.
“The Scottish Government will do everything possible, working with local agencies, to support those who are affected. We have contacted Ernst & Young and will provide support to affected employees through our initiative for responding to redundancy situations, Partnership Action for Continuing Employment (PACE). Through providing skills development and employability support, PACE aims to minimise the time people affected by redundancy are out of work.
“We are also keen to meet as early as possible with trade union representatives and other parties who are affected and will work with the UK Government to ensure that everything possible is done to support staff and subcontractors.”