More details on the City Link collapse

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city link

The administrators of City Link, EY, have posted a statement on the City Link webiste. Here it is verbatim:

“On 24 December 2014 City Link Limited was placed into Administration and Hunter Kelly, Charles King and Tom Lukic of EY were appointed joint administrators.

The business has ceased to accept new parcels from customers and its depots will remain open for a short period of time to enable customers or intended recipients to collect parcels. Those customers who placed parcels with City Link on Christmas Eve for delivery are urged to go to the depot to retrieve their parcels as soon as possible. Any intended recipients who have been notified of a failed delivery are also urged to go to the depot to collect their parcel as soon as possible. The depots will reopen following the Christmas holiday break on Monday 29 December 2014 to enable parties to collect parcels.

City Link will no longer be able to deliver any further parcels and customers are urged to make alternative arrangements for future deliveries.

The on line system to access parcel tracking and therefore check on the whereabouts of your parcel is still live and should be used to identify if you need to collect your parcel and where it is located. In addition , the normal help line telephone numbers remain live and they will be open on Saturday 27 December and from Monday 29th December.”

This represents a ball-ache for sellers with parcels in the system. The best advice is to contact your buyers as soon as possible and explain. It’s worth asking for consideration. If you can provide them with details of where their purchases are, so much the better. Who knows how long the depots will remain open?

It would be good if eBay was considerate on DSRs on affected parcels. We’ve asked about that.

We’d also be interested in hearing from any sellers regarding their experiences here. Is the online console still effective? Will the depots definitely be open on Monday as promised and are there staff there? Is there any customer support at all?

It’s hard not to feel for the 2700 staff and 1000 or so contractors who heard the news that City Link had gone into administration on Christmas Day. There’s no good day to learn you will likely be made redundant. But it’s very cruel that the news emerged on Christmas day. Apparently the company itself didn’t contact staff individually and some union reps have said they delivered the news. Others obviously just found out on the TV news.

The BBC has put together some voxpops from affected staff that make for uncomfortable reading. This article details the locations affected and how many jobs are located there. HQ in Coventry and depots in Hatfield, Warrington and Heathrow will lay off the most workers. There are 53 City Link depots in all.

It seems that in the increasingly competitive world of couriers, that this is the first casualty of the price war.

69 Responses

  1. I used to work as an Insolvency Practitioner and will briefly explain (in basic terms) why the insolvency was made on 24 December.

    At a guess Better Capital (the private equity group owning City Link) would have created a charge over CL when loaning the £40m for restructuring purposes.

    At some point a few weeks / months ago the decision would have been made to pull the plug and the charge holders (likely to be the PE company and banks with floating/fixed charges) will have appointed Insolvency Practitioners to try and find a buyer of the whole company or assets of the company (and if found do a potential pre-pack Administration).

    If no buyers are found (and this is often done at the same time regardless) the Administrators will start hoarding cash in the company. Christmas being the busiest period would be a good time to collect cash – and it is likely City Link would have delayed payments to most of its unsecured creditors to continue cash hoarding.

    The reason company goes under on 24th is that 25 December is the new rent day and rent is likely to be a massive cost.

    The employees weren’t informed as insolvency would be very difficult if employees are aware it is impending and if employees are aware it means competitors are aware and unsecured creditors are aware. If you knew a company was about to go bust you might not continue working or you might not do business with them, or you might not provide supplies etc.

    After the company goes into Administration the secured charge holders will mop up the majority of remaining cash (after insolvency fees), the employees should be fairly well covered by process of prescribed part and redundancy / outstanding vacation payments through insolvency service. The people shafted the most are the unsecured creditors – but this is normal (if you want protection secure your debt).

    This might seem cruel but it is a necessity for proper functioning of a market. A lender needs to feel secure in lending cash and hence derives this benefit from creating charges. If they weren’t they wouldn’t risk lending cash.

    Insolvency here is the creative destruction of a badly run business. Tied up capital and labour will effectively move to more productive means by not being tied up in a zombie company.

  2. Sad to see them go, they were pretty useless overall. Loosing parcels and putting on ‘out of gauge’ charges if you gave a depot too many parcels and they couldnt be bothered. But they took parcels heavier than 30 kgs and over 1.5m long.

    They used to do alot of tyres and other large goods, Other couriers not interested in those goods. Whilst so many couriers can do small parcels, not many can handle larger ones. It means less choice for sellers who deliver larger goods.

  3. This is sad news, but a reality – we looked at using City Link earlier this year because Interlink who we use now charge a fortune for the odd item over 1m or 30Kg. We have a few items that are less than 10% over this and they won’t budge.

    However, it took many emails and calls to even get a price from City Link and then the price was madness – as much as using an on-line company. The drivers that deliver to us do not give a good representation of the company. I feel like they could have made this company in to a market leader, but sadly for whatever reason just didn’t.

    I feel for the staff and even more so for the owner drivers – when you see companies like Yodel doing well – how could City Link not have kept up.

  4. WOW!!! Shippers need to retrieve their parcels from wherever they are, and buyers need to collect from a depot (wherever it is) after paying for home delivery?

    My guess is there is going to be a flood of angry buyers leaving defects for sellers on eBay. What a disgrace.

    Management knew this was about to happen yet still collected parcels, knowing full well it was days away from Administration.

    Like I said previously, They are a victim on their own endemic and internal failures and i’m amazed they lasted so long. Google them and you will be shocked and what you read and how CL have covered it up for so long.

    The only unfortunate thing is some honest employees are now paying the price for the dishonest employees – well maybe the honest employees should have done something instead of turning a blind eye to what they knew was happening around them. I can just picture all those “poor and about to be laid off employees” sitting with their thieving colleagues in the canteen and giggling over their cups of coffee about how they nicked this worth X or that worth Y.

    Maybe now all those “poor and about to be laid off employees” will rethink their ethics and not be suprised at the consequenses of “turning a blind eye to their mates” thieving behaviour and at the same time basically also letting the company fall into decline. Whats worse is Management clearly knew about these issues but choose to do nothing about it.

    Well now they are all in the unemployed boat and probably looking at a career change as from what I’ve heard, CL employees are tainted. Put CL on your CV and you are immediately viewed with suspision so consequently many of the other carriers avoid employing them.

    As the saying goes, you make your bed and then you lie in it……

    Peter, I agree with your comment “Insolvency here is the creative destruction of a badly run business” and IMO CL should have been wound up years ago. They made Yodel look professional and I for one have absolutely no sympathy for anyone at CL.

    I have zero symphaty for CL – Good riddence!!

    Happy New Year!!

    Long live the Revolution!! 🙂

    PS: I speak from experience. Personally, in one single day, I am £1,400 out of pocket due to their theiving employees. Sack the lot and wind it up!

    Want to know more? Then search Google for:
    City Link drivers can steal one item a day

  5. This is more likely to be rape by a venture capitalist than poor management/injudicious pricing ( although these latter 2 doubtless played some part )

  6. I doubt if the Local Management even knew that anything was going to happen. The decision would have been made by the Board of Directors and even they might not have known. After all the ultimate owner was a Financial Institution and the decision may very well have been made by them and then given to the Board of Directors of Inter Link at their last Pre-Christmas Board Meeting.

    Few Businesses plan to go into Administration. After all if they try to keep it secret from the employees or indeed competitors they have little or no chance. It has to be an instant decision although those in the know would probably realise that the business cannot continue to pile up losses or lose market share or whatever for ever. Something has to be done and when everything you have tried has failed there really is only one thing left…Administration.

  7. Steve seems to hate city link, and whilst I think the drivers wee on the warehouse and general behind the scenes logistics seemed to terrible. There was such a bad lazy attitude if u gave the driver 10 boxes, next day he would tell you how much the unloaders moaned. This type of poor attitude stems from management no where else. I’ve booked TNT for tomorrow, it will cost more. But I don’t expect to have any problems

    Whilst my local drivers where top class, losses in the system where huge,.we would often be punished by the heathrow with out of gauge charges simply for giving 10 or 15 larger boxes (24 kg) within our contracted weight. Simply because for some reason the staff seemed to think it was out of order to ask them to deal with anything other than packets.

    The company was rotten down to the temps, and this is why it’s failed. Sure the prices were good, but it was messy and clearly the staff hated customers for simply using the service.

  8. About the only organisation that wants City Link to survive is the RMT Union. So perhaps this is a serious suggestion. Rentokil sold City Link for £1. Let the RMT Union offer £1 for what is left of City Link as a Going Concern. The RMT Union then put up the investment needed and of course the Management(after all they are always telling Industry and the Government about their Management failings).

    So let RMT learn the hard way about thieving drivers and all the rest. My bets is that they will continue to DEMAND that Government does something, although why it should I do not understand.

    So come on RMT Union prove that you are not all bluster and hot air. Prove that you really do know how to run a company, even one as bad as City Link.

  9. I only caught part of the interview but 5 live had one of the owner drivers on earlier. He had 3 vans all mainly working for city link and because they hold back 2 months earnings he estimated he was owed £100,000, apparently the finance director left a month ago so he obviously knew what was coming.

  10. Well it is sad…but…every cloud etc….I need a new Van..And there going to be some cheap ones out there.

    It just the circle of life. Its dog eat dog out there.

  11. Regarding CL vans, these would be white ones but with a green and yellow ‘wrap’ . A plastic skin, relatively easy to remove = white again.

  12. Hi chaps, I didn’t know of the existence of this site but it’s fascinating, the, general, depth of knowledge expressed in this thread is remarkable.

    Anyway to add my 2ps worth I received a copy of an email sent to a seller I had bought an item from on ebay which informed her that my parcel was at the CL Bournemouth depot, it’s not far from me so I went there yesterday but the almost tearful (after all he is losing his job) chap at B’mouth assured me that that information was wrong and that the item was still at the “Hub – Hatfield”

    So I guess that’s lost then.

    It’s bloody typical of PE groups to just grab the money by accepting parcels knowing that they won’t be delivered, it’s theft !

    I’ll try to claim against ebay for non-delivery …

    Best Roger

  13. Probably a fair proportion will walk, especially any which look as if they might have a reasonable value. After all many of the CL Staff who have just lost their jobs will view them as CL Property and thus fair game.

    The vast majority will probably remain within the premises when the gates are locked for the final time. Then no doubt the Liquidators will arrange an Auction of the assets and whatever is left, including parcels, will go into the auction. After all the Post Office auction off the parcels that they cannot deliver(in Belfast I seem to remember).

    So if you do have any valuable parcels still with CL you could try getting on to the Liquidators. But if your parcel is only low value it is probably easier and simpler to write it off.

  14. It will be the seller of any percel that is not collected or delivered that suffers loss
    Credit card charge backs are made from the retailers account,
    CL is a ltd company bigger creditors than someone with a lost parcel will get first bite of the cherry,and still not get paid

  15. Just wanted to respond to the comments about City Link workers being viewed negatively by prospective employers. Not the case, some companies are inviting CL employees to job fairs. They will be trained multi-drop delivery drivers, there will be opportunities for them.



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