City Link fire sale begins as assets sold to DX
Administrators for City Link, already facing a battle with former customers to recover cash owed, begun a fire sale this week as assets were sold off to rival group DX for £1.25m.
The company, which told its 2,300 employees at Christmas they were being made redundant, is run by Tory-donor John Moulton as he heads up the investment firm Better Capital who owns City Link. He has a personal wealth of £100 million but is controversially going to be left largely unaffected by the collapse as Better Capital is a secured creditor, meaning the taxpayer will be left to pick up some of the costs of the staff redundancies.
Ernst & Young said it had agreed to sell a lot, which included cages and scanners, as well as certain intellectual property aspects, to DX, the logistics and mail group listed on the AIM stock market in London.
DX’s chief executive Petar Cvetkovic, who is a former Managing Director of City Link, described the move as a limited investment. He said: “It is very sad that City Link has been unable to continue, particularly for its employees and contractors. We are doing all we can to provide opportunities for former City Link employees and contractors, and to offer solutions to customers who may need a new carrier.”
“This transaction represents our first step in realising the value of City Link’s assets,” said Hunter Kelly, one of the administrators. “We will continue this process over the coming weeks, alongside conducting an orderly wind down of the company’s operations.”
Meanwhile Moulton, who donated almost £500,000 to the Tories from 2004 to 2011 and owns a house in London’s Belgravia and a vineyard in Kent, offered little in explanations or apologies but instead claimed he had little option to tell workers their jobs were at risk on Christmas Eve.