Parcel firm City Link goes into administration

City Link, which employs 2,727 workers, has gone into administration.
City Link, which employs 2,727 workers, has gone into administration.
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Parcel delivery company City Link, which employs 2,727 workers, has gone into administration.

The Coventry-based company, which is owned by investment firm Better Capital, called in administrators from professional services firm EY on Christmas Eve after years of “substantial losses”.

EY said it expected “substantial redundancies” over the coming days because no buyer had been found to save the troubled company.

Operations have been suspended at all its depots until Monday, when customers and recipients will be able to collect their parcels.

Hunter Kelly, joint administrator to City Link, 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 £40 million 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 have temporarily suspended operations at all transport hubs and depots until Monday December 29 2014, when we intend to reopen depots to the public to enable customers and intended recipients to collect their parcels.

“We will also provide support to employees relating to potential redundancies. We are now beginning the process of realising the company’s assets.”

Mick Cash, general secretary of the RMT union, said: “This is the bitterest blow any group of workers could receive on Christmas Day and it is absolutely shocking that the company have sprung this announcement once all the Christmas deliveries have been completed.

“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.”

A number of staff will be retained to help return parcels to customers and help with winding down the company, EY said.

Customers who had placed parcels with the company on Christmas Eve and intended recipients who have been notified of a failed or pending delivery are urged to retrieve their parcels as soon as possible on or after December 29.

They can do so at the company’s 53 depots throughout the UK, which will remain open for a short period of time to enable people to collect their parcels.

The firm’s online parcel tracking system remains live and a help phone will be open on Saturday December 27 and from December 29.

Founded in 1969, City Link said on its website that it had annual revenues of approximately £300 million, a fleet of 1,700 vehicles and delivered 60 million items across the UK and worldwide each year.

The RMT told its members yesterday that it understood that wages owed up to December 31 would be paid, but any further payments are not guaranteed.

It described the news in a circular as a “massive body blow to all our members at City Link who have made great efforts and sacrifices to their pay and terms and conditions in order to make the company a success since its current owners took control in 2013”.