Moulton raps ‘idiotic’ laws over City Link

PRIVATE equity boss Jon moulton has branded the laws governing the consultation period when staff lose their jobs as ‘idiotic’.

The founder of Better capital, whose failed investment in courier firm city Link resulted in 2,586 staff losing their jobs when it collapsed, slammed the law as broken, saying it ‘clearly need fixing’.

in a hard-hitting report written for the institute for Turnaround’s in-house magazine, moulton also complained that ‘all hell broke loose’ following the collapse of city Link at christmas.

He argued both he and his business were demonised and that much of the coverage had been false, and he described his grilling by politicians on the Scottish affairs committee as random.

‘many of the MPS had little or no understanding of the insolvency world,’ he wrote.

in march the politicians published a report that claimed firms were incentivised to ‘ignore the statutory redundancy consultation period, if the fine for doing so is less than the cost of continuing to trade’.

The fine is a maximum of £5,000, and the courier firm failed to hold a consultation period.

moulton told the mail that holding a consultation period can actually bring about the demise of a firm. ‘if you are going bust and you don’t have a route forward a consultation can accelerate the death of company,’ he said. ‘The whole system doesn’t work. Staff are better off not being consulted if there is no hope and they can collect an award from the government for not being given notice.’

He said the only way a consultation period works is if we adopt the same system as in Germany and France where there is a 90- day standstill for creditors, allowing scope for a rescue plan.