Owner of failed City Link struggles to claw back cash
ADMINISTRATORS for City Link are facing a battle with former customers to recover cash owed, raising doubts over whether investment firm Better Capital will get back the £20million it had been hoping to recover.
Better Capital boss Jon Moulton said the only significant asset the company had was cash owed by customers.
‘Administrators are starting to collect that money, but some customers will argue the toss over non-delivery,’ Moulton said.
Better Capital is a secured creditor and will be ahead of others owed money by the collapsed company, leaving the taxpayer to pick up some of the costs of making the firm’s 2,356 staff redundant.
Moulton defended the controversial structuring used by Better Capital to make its £40million investment in City Link – since written down by half – saying the taxpayer bill would be modest.
‘Eighty per cent of the workforce has less than three years’ service, meaning it will be low single millions in terms of redundancy payments,’ Moulton said.
‘The income tax, National Insurance payments and VAT the state has received over the last 18 months will probably be 20 times the redundancy bill.’
City Link was losing half a million pounds a week when it went into administration. Better Capital bought the business from Rentokil 18 months ago for £1.