Farepak in administration: What to do? (Merged Thread)

hita asked farepack to protect customer payments in august but was told advised not to on legal reasons

michjoe wrote:

I have got a letter from my local MP today though stating that he is doing all he can to support the trade and industry minister Ian McCartney in his investigations.

I received my MP's reply today too, saying the same thing.

Theres just been something on 5 live about how some MP has come to an agreement, about helping thousands of farepak customers. I'm sorry I cant be clearer than this, does anyone know anymore?

Just found this...

Hope for hamper firm's savers

Press Association
Saturday October 21, 2006 3:48 PM

Thousands of families facing a bleak Christmas following the collapse of hamper savings firm Farepak may receive some cheer following a meeting between consumer minister Ian McCartney and retailers.

The British Retail Consortium accepted in principle proposals for a goodwill gesture towards Farepak customers who have lost out.

Swindon-based Farepak ran a savings scheme in which an estimated 150,000 customers have put money aside for vouchers and Christmas hampers. But administrators have said that no orders will be fulfilled after the company went into administration on October 13.

Some of those affected are understood to have saved four-figure sums to ensure themselves a merry Christmas, but are now facing a holiday season without presents or turkey.

No details were immediately available of the goodwill scheme, which is backed by many large stores, but Mr McCartney said it must be "simple, not derisory, fraud free, easy to administer at store level and have as much choice as possible".

BRC spokesman Richard Dodd said: "This is purely a goodwill gesture. The fact that Farepak has gone bust is nothing to do with other retailers, so they are not under any obligation to step in."

Any scheme would have to be organised swiftly, with Christmas just two months away.

"It is potentially quite a substantial undertaking, given the numbers of people involved, but retailers have overwhelmingly expressed a willingness to help," said Mr Dodd.

Mr McCartney said: "It was a productive meeting and the BRC accepted in principle the idea of a goodwill gesture, given the exceptional circumstances surrounding Christmas.

"The BRC will now be contacting their members so that retailers can decide what they might be able to provide and to consider further the practical steps required to take this matter further."

© Copyright Press Association Ltd 2006, All Rights Reserved.

http://www.guardian.co.uk/uklatest/story/0,,-6162242,00.html

and

http://www.thesun.co.uk/article/0,,2-2006490006,00.html

The following is a reply I had regarding some questions I put to the HITA, probably a standard response sent to all who have complained:

The parent company, European Home Retail last filed it's accounts up to
April 2005 and these showed an operating profit in excess of £4,000,000
which was satisfactory.
On the 30th June they published a statement saying that their existing
funding would run out in the autumn and they were looking for extra
investment. We spoke to their directors and were assured that this
investment would be found and they would honour their liabilities.
On the 23rd August their shares were suspended. Again we asked their
directors to clarify the situation and if the customers payments were now
being ring-fenced. They said that they were confident that the business
would survive but they had taken legal advice and had been told that it was
not necessary to protect the further payments received from customers.
On the 13th October administrators were appointed.
Our concerns are many and one of the main ones is the time between their
shares being suspended and the appointment of administrators during which
period more and more prepayments arrived with the only beneficiary being
their bank ( Halifax Bank of Scotland) who would have seen their exposure to
the company lessened.
Our solicitors have written to their bank demanding and explanation and we
have discussed this matter openly on media interviews.

I am completely independent from Farepak or any of the companies within the
group.

With the information we have we feel that this event is singular and has
been caused by the parent company using the pre-payments to finance other
companies within the group and the bank happy to see YOUR payments helping
to pay back the overdraft. We hope to expose these facts.