City Link administrators claw back half of £31m debt

ADMINISTRATORS acting for collapsed parcel delivery group, City Link, have put together a special team to chase the top 155 debts from the business.

Robert Kelly, administrator from EY, said at the date of his appointment on Christmas Eve, Coventry-based City Link had debts of £30.9m. The debtor profile of the business comprised 4,890 customers spanning around 7,900 accounts.

In a statement to creditors, Kelly said more than have the debt had already been recovered but he warned the administrators would consider legal action if customers refused to pay what was due.

“The joint administrators have devised a strategy whereby the largest 155 debts are to be pursued by a dedicated EY debt collection team with the support of retained City Link staff,” said Kelly.

“We have also engaged an external debt collection agency to assist in pursuing the significant volume of remaining customers. We believe this will be a more economical and efficient method of collection given the high volume and low average debt value.”

He said the administration was an intense process and one placing significant demands on EY staff time.

He speaks of IT challenges which caused slight delays in contacting debtors, which coupled with the large number of residual parcels in the network initially limited the administrators’ ability to robustly pursue the debts.

However, he said these issues had since been remedied and, to date, more than half of the total debts – £16.3m – had been recovered.

“We estimate that cash collections will now accelerate following the repatriation of the remaining parcels. The joint administrators are taking a proactive and robust approach to collection of the debtor ledger. This will include commencing legal action if customers refuse to pay what is rightfully and legally due,” added Kelly.