IT will come as little cheer to those self-employed drivers and small businesses affected by the collapse into administration of courier firm City Link just prior to Christmas, but a Commons Select Committee says that they were misled about the company’s ability to pay.
small businesses and self-employed drivers working for City Link were encouraged to take on additional costs
Worse, self-employed van drivers and small van operators were deliberately encouraged to undertake further investment even though the owners of City Link, Better Capital, knew that the company was heading towards insolvency.
Ian Davidson MP, Chair of the Committee, said:
“We are dismayed that, although it was clear for some time that there were serious questions over the ability of City Link to continue trading after December 2014, small businesses and self-employed drivers working for City Link were encouraged to take on additional costs, despite the company being aware that there was a strong possibility that they would not receive payment for a significant part of their work in December. The additional work undertaken by these people has left some of them in serious financial difficulties, with some small firms forced into administration themselves or relying on goodwill from their own creditors to struggle on.”
The committee found that the insolvency system was “skewed” to those who had provided secure credit, “because the losses are borne by those who work for a company on a self-employed basis, or as contractors or suppliers”.
According to reports in national newspapers this morning, it’s likely that the self-employed van drivers and van operator contractors are unlikely to receive money they are owed.