10 July 2012
Farepak customers to receive half of money lost
Liquidators BDO have confirmed that customers and agents of Farepak will receive their final payments by the end of August. People who lost money when the Swindon-based Christmas savings firm went bust in 2006 had been waiting for the end of the various court cases surrounding the insolvency to learn the final details of the deal.
In a recent court hearing Mr Justice Smith exonerated nine former directors of blame after the government’s Insolvency Service was forced to admit that its case did not stand up. Following this decision however, Justice Smith accused the HBOS banking group of playing ‘hardball’ and in a public statement suggested that HBOS reconsider their contribution to the compensation fund. He said "This is not a court of morality, but I would suggest that HBOS really ought to look at the collections that they took in September and October  and seriously consider whether or not they ought to make a further substantial payment to the compensation fund."
Lloyds banking group then last week announced that they would contribute £8m to the compensation fund, allowing the joint liquidators to announce the final compensation plan. On their website today, Unfairpak, the Farepak campaign group, announced that Farepak was being wound up and broke down the terms of the deal.
They released a press statement saying “The Joint Liquidators are now able to confirm that a payment will be made to customers and agents of approximately 32p in the £. This sum includes the dividend payment of approximately 13p in the £ secured by the Joint Liquidators and the £8million ex-gratia payment made by Lloyds Banking Group. The Joint Liquidators will aim to make payments to Farepak’s 114,000 creditors at the end of August. When added to the 17.5p in the £ given to all customers and agents by the Farepak Response Fund charity, set up by the Department for Trade and Industry in 2006, the dividend payment means that customers and agents of Farepak will have received a total of approximately 50p in the £.”
Suzy Hall, who co-ordinated the Unfairpak campaign, a group set up to support victims in the wake of the crisis, said she was delighted with the final figure, describing it as a "fantastic result".
"Never in my wildest imagination did I think we would get back 50p in the pound. Unfairpak believe we have won."
"The demographic of Farepak savers is low-income women so this is absolutely wonderful," she said.