Sad story on the BBC about the plight of owner driver sub contractors for City Link. Some of them were businesses in their own right, with vans on finance and staff, all liveried and logo'd as City Link.
MPs have questioned flaws in the insolvency laws, as City Link continued to trade without notifying anyone about the seriousness of the business finances. It sites examples where contractors had just ordered or taken delivery of new vehicles at their own risk, unaware that the company was about to fold.
Due to insolvency laws, they are far down the pecking order and will get 2p in the pound if they are lucky, with lenders and investors being at the top of the tree.
According to the BBC News, the MP's report:
"says that under the current rules it is in the financial interest of a company to break the law and ignore the statutory redundancy consultation process, if the fine for doing so is less than the cost of continuing to trade.
The fine will end up being paid by the taxpayer, it pointed out."
The counter argument is that without protection for lenders, businesses will struggle to get investment in the first place, but in this scenario it does seem morally wrong.
What does anyone else think?
