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Tuesday, December 19, 2006

The Farepak Debacle

The hapless victims of the Farepak collapse have had their hopes dashed of a pre Christmas settlement of the monies owed to them. Mr Justice Mann, a High Court judge, said yesterday that there were too many issues that were not fully resolved for him to be able to agree to a distribution of about £1M.

The £1M being the figure suggested by the administrators of the collapsed saving club company.

Mr Justice Mann said:

"It will doubtless seem to some that the points which currently seem to stand in the way . . . are technical and unmeritorious... They are real points, I fear, and they arise out of the way that this company conducted its business. They must be disposed of properly and on the basis of law, not purely on the basis of sympathy and Christmas."

The contentious point is the fact that money was paid into Farepak, between October 11 and October 13. The directors had internally decided to cease trading on 11 October. However, the company was not formally put into administration until October 13.

To add to the complexity of the case is the fact that people paid monies to around 26,000 agents, who would in turn would pass the money to the company at a later date.

Overall it is estimated that Farepak customers, many of whom are low income families, have lost around £40M.

In other Farepak news, PricewaterhouseCoopers have decided to go ahead with creditors' meetings for EHR (the parent company of Farepak) despite concerns that they will be swamped by Farepak customers.

PwC's meetings are not expected before Christmas.

As if to add to the misery of the Farepak customers, it is also reported that loan sharks are now targeting them; offering them financially suicidal loans.

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