City Link appointed administrators on Christmas Eve, temporarily suspending all operations over Christmas, citing continued “substantial losses over several years” and admitted it would be unable to accept new parcels due to the further losses it would incur.

Administrators Ernst & Young’s (EY) also revealed that it had failed to identify a buyer for the company, despite putting it up for sale before the administration process had begun.

A spokesman for EY told that: “No buyer has been identified following a sale process for the company and its business. Any parties interested in acquiring any parts of the business or its assets should contact the joint administrators immediately.”

The troubled parcel giant, which had been acquired by Jon Moulton’s Better Capital in April 2013, immediately ceased to accept further parcels from customers its head office and transport hub in Coventry; its three transport hubs in West Drayton (Heathrow), Peterborough and Warrington, and its 53 depots throughout the UK.

Hunter Kelly, Charles King and Tom Lukic of EY’s restructuring team were appointed administrators of City Link Ltd and City Link (Properties) No.1 on 24 December 2014. City Link (Properties) No.1, which manages and coordinates payments on selected property leases on behalf of City Link and has no employees, will be wound down.

Meanwhile the administrators said that they anticipated substantial redundancies over the coming days among City Link’s 2,727 employees. The company also engages the services of approximately 1,000 self-employed contractors.

Substantial losses

Joint administrator Hunter Kelly, said: “City Link has incurred substantial losses over several years. These losses reflect a combination of intense competition in the sector, changing customer and parcel recipient preferences, and difficulties for the company in reducing its cost base.”

City Link achieved pre-tax losses of £19m for the 10 months ending 31 October 2014. It recorded a pre-tax losses of £21.1m for its financial year ending 29 December 2013, narrowing losses of £35.9m for the financial year ending 30 December 2012.

“The strain of these losses became too great and all but used up Better Capital’s £40m investment, which was made in 2013 and intended to help to turn around the Ccompany. Despite the best efforts to save City Link, including marketing the company for sale, it could not continue to operate as a going concern and administrators were appointed,” added Kelly.

City Link

City Link appointed administrators on Christmas Eve

Christmas peak investment

In November City Link revealed it had invested in additional drivers, delivery vehicles and warehouse staff ahead of the bumper parcel volumes expected this Christmas.

It said it would add an additional 1,168 delivery and collection drivers to its workforce, including 100 trunking drivers, 433 agency drivers and 735 subcontractors. It also sought to boost warehouse staff numbers by 469 and its operations support workforce by 30.

Some 434 vans and 80 trailers joined the fleet for Christmas, along with 14 additional forklift trucks. It also added 85 Lawrence David trailers and 86 Cartwright double-deckers to its fleet in 2014.

Sortation capacity at its Coventry hub was also increased with the installation of an automated system, which City Link claims could potentially increase throughput by 50%.

However Kelly said: “We have temporarily suspended operations at all transport hubs and depots until Monday 29 December 2014, when we intend to reopen depots to the public to enable customers and intended recipients to collect their parcels. We will also provide support to employees relating to potential redundancies. We are now beginning the process of realising the company’s assets.”