Former Farepak parties face being sued over loss of customers' savings
Tuesday 13 May 2008
The saga surrounding the collapsed savings club Farepak has entered new territory with liquidators announcing plans to sue former parties over the company's high profile failure two years ago.
The liquidator, BDO Stoy Hayward, has "issued proceedings against a number of parties in an attempt to secure further monies for the benefit of creditors, including customers" according to a statement, but it is unclear whether this includes former directors including former chief executive William Rollason or its former managing director Nick Gilodi-Johnson. The liquidator has refused to divulge any further information as this may prejudice the legal proceedings and jeopardise the success of the case.
Some 150,000 people, typically from low to middle income households, each lost an average of £400 worth of Christmas savings when the company went into administration in October 2006. They have so far been offered only 5p for every pound lost through the club's regular savings plan, but no payments have been made via the liquidator due to the ongoing legal wranglings. To date, about 122,000 claims worth £38m been made by former Farepak customers. The statement warned that the delay to payments is now in the hands of the courts, and that "it will not be possible to pay a dividend before the end of this year".
The Consumer minister Gareth Thomas announced yesterday that a two-year investigation into the debacle had concluded and that the Department for Business, Enterprise and Regulatory Reform is considering the findings with a view to further action, although the report will not be made public at this stage.
He added: "The Government has great sympathy with those people who have lost money they saved as a result of the collapse of Farepak. We are doing all we can to prevent other families suffering similar problems in the future."
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