The private equity owner of collapsed delivery company City Link has said it stands to recoup up to £20 million of its investment even as it relies on the taxpayer to fund redundancy payments for nearly 3,000 staff.

City Link’s owner Better Capital said that after buying the business for £1 last year, it had made its £40 million investment in the form of a secured loan to “protect its interests” in the event of the company’s collapse. As a secured creditor, it will rank ahead of staff when proceeds from the liquidation are distributed.

“Most of our deals are financed this way, it is not unusual,” said Jon Moulton of Better Capital. “Would we have done the deal if the investment was in equity and not secured? I doubt we would have invested as much – so no, probably not.” – (Copyright The Financial Times Limited 2014)