When Farepak collapsed back in 2006 it took £37m worth of savings down the toilet with it, meaning thousands of Christmas hamper savers were out of pocket for the following Yuletide. A real turkey of a situation, you might say. Today, top-five accountancy firm BDO confirmed that all 114,000 people affected by the collapse will have half of their savings reimbursed. Sleigh bells are ringing (well, half of them anyway).
Critics point to HBOS (with which Farepak banked) as a major culprit in the collapse of the scheme, because of the way in which it handled the liquidation. After several years of legal fights – including the Insolvency Service having to retract its judgement that the company’s former directors were to blame – the money secured is 26% from the liquidator, 35% from a charity set up for the savers, and also an £8m lump sum payment from HBOS, which is now owned by Lloyds Banking Group.
The judge gave more detail on HBOS’ behaviour: apparently it had come down hard on Farepak, forcing it to continue operating and allowing customers to join the scheme and deposit money even though management were expecting the bankruptcy. Most of the savers in the scheme were low-income women trying to prepare for the Christmas season. Suzy Hall, a saver who co-ordinated the ‘Unfairpak’ campaign to get some money returned, said: ‘Never in my wildest imagination did I think we would get back 50p in the pound.’
Reportedly, the liquidators have also waived some of the costs of the winding down process, which has helped protect more of the money available to go back to savers. No doubt it’s a pain in the neck for HBOS to have to payout £8m, but as that amounts to only half a mince pie, half a jar of cranberry sauce and half a roll of wrapping paper for Farepak's savers, perhaps they’re getting off lightly…