City Link owner lashes out at MPs over “unfair” assertions
The owners of collapsed UK parcel carrier City Link have hit back at MPs over their criticism for the way employees and contractors were treated. City Link went into administration just before Christmas, with more than 2,500 employees laid off on New Year’s Eve.
Better Capital, the private equity firm that bought City Link from Rentokil Initial for a token £1 in April 2013, then withdrew funding support on 22nd December last year, said it was “dismayed” at criticism from MPs on the Scottish Affairs and Business, Innovation and Skills Committees.
The equity firm’s chairman, Jon Moulton, wrote in an open letter to the committees yesterday that “serious assertions” made by the committees after their joint inquiry into the City Link collapse were “unfounded and unfair”.
The committees said in their report that City Link chiefs had taken a “deliberate decision” after putting the company into administration on 22nd December not to inform employees and contractors. The MPs report claimed this was done for the financial benefit of City Link and Better Capital.
Moulton hit back yesterday stating that the committees had made accusations against his company without allowing Better Capital the opportunity to answer the accusations.
The Better Capital chairman was among witnesses called during the inquiry in January and February 2015. But, he said in his letter that his company had not expected the verdict delivered by the MPs over the decision not to immediately announce the company’s administration status.
“We do not believe you received any evidence to support your statement – indeed we would have argued that its converse is true,” the Better Capital chairman said regarding the MPs’ claim that City Links actions had amounted to a “deliberate deception by omission”.
Moulton claimed that continuing operations at City Link for two days after the company went into administration meant employees were paid up to the end of December, instead of only up to 22nd December, and that the company avoided failing to deliver “hundreds of thousands” of Christmas parcels.
The Better Capital chairman also said in his letter that since his company was only a shareholder of City Link, there was no legal requirement for it to make any announcements on insolvency. “It is the law and the practice that the directors of a company are the judges of a company’s solvency,” he said.
Moulton said his company would welcome the chance to make its case before the committees.
Legal action
Separately, another law firm has come forward to attempt legal action against City Link on behalf of former staff.
After JMW Solicitors revealed earlier this month that they are taking a compensation case to an Employment Tribunal, Leeds-based Morrish Solicitors LLP has now said it has lodged an Employment Tribunal claim on behalf of 250 former City Link staff.
The claim was that City Link failed to “properly consult its workforce” over redundancies.
The law firm said that when more than 100 staff are set to be made redundant, a company is required to provide 45 days of consultation. City Link’s actions mean it is open to claims for a Protective Award, the lawyers said.
It could mean City Link is liable to provide up to 90 days of gross pay, claimed Morrish Solicitors.
David Sorensen, Partner at Morrish Solicitors, said his team was working hard for ex-City Link employees to gain compensation.
“The claim has now been lodged with the Employment Tribunal and once the claim has been processed, it will be sent to City Link’s administrators. They will have 28 days from receipt of the Claim within which to lodge a formal response and this will confirm whether the Claim is admitted or whether the administrators (on behalf of City Link) intend to defend it,” Sorensen said.
“Whilst the tribunal process has only just started early indications are that each employee may recover several thousand pounds depending on how the case proceeds, but it may be several months before the final hearing will take place.”
