Victims of the collapsed Farepak Christmas hamper scheme are expected to share �5.5m, while the cost of dealing with administration, including fees, has hit �8.2m
Five years after Christmas hamper firm Farepak collapsed, leaving about 120,000 customers nearly �40m out of pocket, the cost of dealing with the administration has exceeded any potential compensation for its victims.
Farepak, which allowed people to spread the cost of buying Christmas food and presents, went bust on 13 October 2006, with customers losing an average of �400. Victims are expected to receive about �5.53m in compensation.
But administrator BDO today confirmed the cost of the administration and liquidation to date, which includes its own fees as well as those of insurers and PR executives, stands at �8.2m.
Louise McDaid from the Farepak Victims Committee, which has launched an online petition to demand the outstanding money and that those responsible be held to account, told the Daily Telegraph: "The government has a responsibility to ensure that people's money is protected. If they can protect the banks, then they can protect ordinary working people."
Farepak, which was set up in 1969, allowed customers to pay in money on a monthly basis to secure hamper deliveries at Christmas.
But thousands of families were told not to expect deliveries when the Swindon-based company appointed professional services firm BDO Stoy Hayward as administrators in October 2006.
About 5,900 Farepak customers who paid money into their accounts after the company went bust received cheques in September 2009, but many are still owed money paid in before the date of liquidation.
The company's former directors, who include City luminary Sir Clive Thompson and former boss of Blacks Leisure Neil Gillis, agreed to pay �4m in compensation ? equivalent to 15p in every pound.
The nine chiefs face disqualification from acting as directors after the Insolvency Service lodged an application in the high court in London in February on behalf of business secretary Vince Cable. The case is continuing.
A spokeswoman for BDO said: "The administration and liquidation of Farepak is complex and has involved an exceptionally large number of creditors, the identities of which were unknown at the outset of the administration and all fees have been approved by the liquidation committee."
Source: http://www.guardian.co.uk/money/2011/nov/28/farepak-administration-costs-outstrip-compensation
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