City Link administrators hoping to recoup £32m

ADMINISTRATORS acting for collapsed parcel delivery group City Link are hopeful of recovering more than £30m from former customers of the business.

Outstanding invoices are thought to show that the Coventry-based business was owed around £32m at the time of its collapse on Christmas Eve. If the money can be recovered then it would go a long way towards recouping former owner Better Capital’s initial outlay in the business.

Better Capital owner, venture capitalist Jon Moulton was forced to issue an apology to workers at the firm for the way the collapse had been handled – many staff only found out about the failure of the business when the story was leaked to the media on Christmas Day.

However, Moulton had said that he was hopeful of recovering around £20m of the £40m Better Capital pumped into the business after it bought it from Rentokil Initial for a token £1 in 2013.

Just 141 staff from the original 2,727-strong workforce remain with the business and these are helping administrators from EY with the final winding down of the company.

Undelivered parcels are being returned to the Coventry hub so the network of 51 depots around the UK can close by the end of next week.

The administrators from EY said in a statement to the Financial Times: “The administrators of City Link are working with retained employees to update the company’s accounting records to establish the full scale of the debtor book. Initial indications are that the debtor book has a value of approximately £32m.”

Better Capital is likely to be ahead of the pack so far as creditors are concerned because its investment into the business had been structured as a secured loan.

However, whether former staff will receive what they are owed in unclear, while unsecured creditors may also struggle to get their money back.

The administrators have already confirmed that the bill for redundancy payments will be picked up by the taxpayer.

Meanwhile, in the aftermath of the collapse, politicians are pressing for an inquiry into the circumstances leading up to the company’s collapse.

Business Secretary Vince Cable had earlier rejected union calls to nationalise the business but has said the firm must be held into account for what happened and for the way staff found about the collapse.

If allegations of serious misconduct are proved then a full scale Government inquiry may be established.

Shadow Business Secretary Chuka Umunna has said the inquiry is warranted, if only to recognise the torment undergone by staff and suppliers.

He has been supported by Coventry South Labour MP Jim Cunningham who spoke in the Commons about the appalling treatment of the workers.