Friday, February 18, 2011

The Farepak Debacle IV

Those of you with long memories may recall that I wrote several articles about the demise of Farepak (the Christmas hamper business) in 2006.

The wheels of justice in Britain grind slowly and, over fours years later, moves are afoot in the High Court by the Insolvency Service to disqualify the 9 directors of Farepak and its parent from holding a directorship again.

The ex directors intend to fight this action against them.

Farepak had more than 100,000 who (unusually for many British people) actually tried to plan ahead for their Christmas, and put some money away to cover the cost. When Farepak collapsed they lost on their money (on average £400 each).

The Insolvency Service said "the conduct of each director in relation to the relevant company or companies makes him or her unfit to be a director".

Farepak was not regulated by the Financial Services Authority at the time, it was quite outrageous that it acted as a saving bank yet was outwith the control of the FSA!

Its victims received only about 17.5p in the pound from a government-backed response fund set up after the company's collapse.

Last year they heard they would receive a further 15p in the pound after Farepak's joint liquidators, BDO Stoy Hayward, announced that an action against the directors of Farepak had been settled for £4M, with no admission of liability by the directors.

Post Farepak the government finally took action and announced that payments to Christmas Hamper schemes would be ring-fenced, so that savers will be protected from suffering the same fate as the victims of the Farepak collapse.

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