Osmosis faces Kay O'Neill libel action

Logistics specialist claims it terminated contract due to stock issues.

Logistics services specialist Kay O'Neill has hit back at claims byues. Osmosis that it contributed to the distributor's near-collapse and is considering taking legal action against it.

The move comes just one week after Osmosis said it was considering taking legal action against the freight company after claiming that Kay O'Neill's decision to outsource Osmosis' warehousing in August 1998 proved to be a bad one.

John Fenton, managing director of Osmosis, claimed the service failed to live up to the original proposal, resulting in numerous service issues and culminating in the logistics firm withholding Osmosis' stock (PC Dealer, 5 May).

But Charles Kay, chairman of Kay O'Neill, claimed last week that the distributor had cleared outstanding stock issues promptly when it ended its contract with Osmosis, after hearing it had financial difficulties.

'After due consideration, we took the decision to terminate the contract with three months notice, offering Osmosis a smooth and reasonable handover period to any new logistics supplier,' claimed Kay.

'Due to the level of outstanding debt, we had to protect our financial position and were advised by our lawyers to take a lien on Osmosis goods in our warehouse until its account was up to date. These payments were received very promptly and all goods immediately released. We believe this was the only possible professional response we could take.

'We are sorry for Osmosis, but think it unwise of it to seek to blame others for its business failure,' he added.

Michael Parker, senior partner of legal firm Clyde & Co which is acting for Kay O'Neill, said: 'After working closely with Osmosis over the past eight months, my client ... totally rejects the suggestion that it in any way contributed to Osmosis' financial problems. The immediate commencement of libel proceedings is now being considered.'