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City Link collapse

1993-city-link-trucks

Putting a business into administration on christmas day is quite extraordinary timing and about as unseasonal as you could imagine, but thee is of course no good time for bad news, despite what certain political spinners might have had us believe in the past.

Was City Link’s collapse predictable? Should creditors have been aware of the dangers?

My guess is that credit insurance cover had disappeared but given my current issue with credit agencies I would not be greatly surprised to find out that some suppliers have taken a hit.

City Links last accounts showed a net worth of £27m in December last year and a working capital of £11m. That could have given many creditors confidence but it wasn’t difficult to spot the trend in profits. A loss in 2011 of £40m was reduced to £32m in 2012 and then to £20m in 2013. A positive trend? Maybe but clearly further losses in 2014 would have tipped them over the edge.

Tight though. It could be interesting to see the actual final figures and I have seen businesses survive with worse ratios.

Was it worth it though? The business was in a very competitive field and it was perhaps hard to see where profitability could be generated.

Part of credit assessment is assessing a businesses place in the overall market and their opportunities. Quite frankly the field of logistics is a mature market and not perhaps an area offering up much scope for innovation

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