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City Link Owners Slammed by MPs Over Handling of Administration

Written by: Keith Tully

Reviewed: Tuesday 24th March, 2015

Members of Parliament (MPs) have heavily criticised the owners of the parcel delivery business City Link for their handling of affairs both before and after the company entered administration late last year.

City Link made national headlines over the 2014 Christmas period when 3,000 people lost their jobs and the company wound down its operations around the UK.
 

Now the owners of the business, the private equity firm Better Capital, stand accused of behaving unfairly and in an immoral fashion towards its employees and contractors.
 

At the heart of the claims made by members of the UK parliament’s Scottish affairs committee were allegations that City Link and Better Capital misled self-employed staff and contractors working for the delivery operator in the days and weeks prior to it entering administration.
 

In fact, City Link and its owners have been accused by the committee in an official report as being “morally, if not legally, responsible for the difficulties that many individuals and small businesses now find themselves in”.
 

The essential claim made by the Scottish affairs committee is that City Link encouraged its contractors to take on more staff and vehicles than they otherwise would have and to work longer hours than normal in the run up to Christmas.
 

According to the MPs, these encouragements led self-employed suppliers and contractors of City Link to commit more of their valuable resources to providing the delivery firm with services when administration and non-payment of invoices was already highly likely. 
 

“We are dismayed that, although it was clear for some time there were serious questions over the ability of City Link to continue trading after December 2014, small businesses and self-employed drivers working for City Link were encouraged to take on additional costs despite a strong possibility that they would not receive payment for a significant part of their work in December,” said the MPs’ damning report.
 

The committee concluded that City Link and its private equity owner were guilty of “deliberate deception by omission” in acting in their own financial interests and without regard to the prospects of the 1,000 or so self-employed delivery drivers and agency workers they were deploying late last year.  

Keith Tully

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Keith Tully
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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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