UK

City Link Suffers 2,356 Job Losses

31/12/2014 17:10 GMT | Updated 31/12/2014 18:59 GMT
PA

The administrators of delivery firm City Link have announced 2,356 job losses after a bid to buy the company failed. Many of the company's staff found out about its collapse on Christmas Day and had been warned to expect "substantial redundancies".

The administrators said 371 people have been retained to deal with remaining parcels and to assist in realising the Company's assets and winding down its operations.

City Link's administrators said that an offer made for the company had not been acceptable. The administrators at EY said the offer made by a consortium "offered no money up front and significantly undervalued the assets to be acquired". They said: "The Administrators proposed an alternative structure that would be acceptable and common in these situations.

"The consortium, despite attempts to make them reconsider, declined to amend their original offer."

The redundancies will affect the head office in Coventry as well as hubs and depots around the country. There will be 468 job losses in "Central Functions", which includes head office staff, and a futher 279 staff will lose their jobs in the Coventry hub. The remaining redundancies relate to a number of different hubs and depots across the UK.

Hunter Kelly, joint administrator of City Link Limited, said: "It is with regret that we have to announce substantial redundancies at City Link Limited, which ceased accepting new parcels on 24 December 2014. "The Company endured substantial losses, which ultimately became too great for it to continue as a going concern, and City Link Limited entered administration following an unsuccessful sale process.

"At meetings across City Link Limited's UK sites on Monday 29 December 2014 and Tuesday 30 December 2014, employees were informed that there would be substantial redundancies as no new business was being taken on. Many of these employees were sent home, and informed that they would shortly receive formal correspondence to confirm their work status."

The RMT union said the failure to secure jobs was a "a disgraceful and cynical betrayal". RMT general secretary Mick Cash said: "The confirmation from the administrators that they have just sacked 2400 staff and are pulling the plug on any efforts to save City Link is a disgraceful and cynical betrayal that will wreck the lives of our members, many of whom are owed thousands of pounds.

"RMT does not believe that those pulling the strings had any interest in saving this business and were happy to cut and run leaving a trail of human misery in their wake. The City Link collapse has blown the lid off the cosy relationship between bandit capitalism and the political elite.

"RMT will continue to advise and represent our members caught in this corporate failure. Those responsible will slink away with their own resources ring fenced and leaving the taxpayer to pick up the redundancy tab. The City Link Christmas destruction is an act of industrial vandalism that shames our nation while the Government looked on and offered nothing but hollow words."

A handful of staff are being kept on in each depot to deal with the parcels which remain in the company's network. Some 127 people have also been retained in Central Functions and nine in the Coventry hub. City Link employees who have lost their positions have received letters officially confirming their redundancy.

The administrators said staff affected by redundancy will be offered advice and support in making claims for redundancy and notice pay. Earlier today Mr Cash disclosed details of a possible last-ditch rescue, saying they had been "made aware of what we believe to be a credible bid to take over some or all of the City Link trading operation".

But the administrators said this afternoon that an offer they had received "offered no money up front and significantly undervalued the assets to be acquired."

Scottish Labour's shadow cabinet secretary for finance, Jackie Baillie MSP, said: "Our first thoughts are with the workers and their families who have found out that they have lost their jobs. This is a terrible way for them to start the New Year. It is essential that the Scottish Government now sends in a task force to provide the highest level and best quality support to the people who have been made redundant.

"Many of these City Link depots are located in parts of Scotland that already have high levels of unemployment. They cannot afford more people out of work. The first duty of the Scottish Government now is to find work for these men and women, including retraining them for other opportunities."