Defunct delivery company City Link kept staff members in the dark about its administration to avoid “utter chaos” in the run up to Christmas.
An investigation by the committees of Scottish government body Scottish Affairs and Business, Innovation and Skills (BIS) has learned administrators wanted to wait four days before telling staff the business was going bust in order to protect the company’s assets.
Giving evidence at the session, administrator Hunter Kelly from professional services firm EY said staff were allowed to keep on working even though the business was being wound up in order to reduce the costs of the administration.
Kelly said the business was effectively insolvent from December 22 when private equity firm Better Capital refused to give City Link additional funds, but he made the decision to delay the announcement to avoid “utter chaos” in the pre-Christmas rush, according to The Telegraph.
Kelly said: “The original plan [to make the announcement] was for Boxing Day because there would be 30,000 parcels in the system instead of 300,000 and it would make the cost of administration less with less claims. I took the personal decision not to make the announcement in the hope of getting through to Boxing Day.”
However a letter from the RMT union about City Link was circulated on December 24 and news of the administration that made most of City Link’s 2,800 staff redundant broke the next day on Christmas day.