Business Secretary Vince Cable urges Farepak’s bank to pay up
Business Secretary Vince Cable last night defended his actions following the failed legal action against directors of Swindon-based Farepak, the Christmas hamper firm that collapsed six years ago.
He has also promised to meet victims of the case, and has written to Farepak’s bank to see if it will make another payment into a relief fund.
As the Daily Press reported, the Insolvency Service, part of the senior Liberal Democrat’s department, wanted seven former bosses at Farepak, and its parent firm, disqualified form being company directors.
The case was abandoned and a High Court judge overseeing it said the lawyers involved had been right to conclude there was “no prospect of success”.
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Taxpayers may have to foot the multi-million pound legal bill, but Mr Cable believes he acted appropriately and in the public interest.
He said: “This is a regrettable incident that has blighted so many people’s lives.
“I wish once again to express my regret and sympathy for the victims who have had this hanging over them for many years now.
“More than 100,000 people had their Christmas ruined when Farepak collapsed and some families have been seriously affected by the loss of their savings.
“The case was launched in July 2009, which was based on good legal advice and the Insolvency Service has had a very high success rate with disqualification actions.
“I want to stress that although disqualification proceedings have been dropped, the Government is considering the wider implications of the judge’s statement and the way forward.
“I will therefore be meeting representatives of the creditors and a selection of MPs in the coming days to discuss the case.”
He said the Insolvency Service had disqualified over 6,400 directors in the past five years, with a prosecution success rate of 94.2 per cent, and lost cases against only three defendants in the past year.
The judge, Justice Peter Smith, said Farepak’s bankers HBOS had taken a “hard-boiled” tone and could probably have saved the group, but decided not to invest the £3 to £5 million needed.
He said HBOS, which recovered millions loaned after Farepak collapsed, had put £2 million into the distress fund, and should seriously consider a “further substantial payment”.
Mr Cable said he had written to HBOS for their views on the judge’s statement “and to understand what the next steps might be, especially when it comes to the matter of increasing the compensation fund”.
And he has written to the watchdog, the Financial Services Authority, for its views on what the judge said about the bank’s conduct.
Farepak, which allowed people to spread the cost of Christmas food and presents, went bust in October 2006, with customers losing an average of £400.