Belfast Telegraph

Saturday 19 April 2014

Speed up Farepak process, MP urges

Farepak went into administration in October 2006

An MP has called on the UK Government to intervene and speed up the compensation process for Farepak families after it emerged more than 200 customers have died since the Christmas hamper firm collapsed five years ago.

Mike Weir, the SNP's Westminster spokesman for consumer affairs, said liquidators BDO Stoy Hayward confirmed in a letter that 207 people affected by the 2006 collapse have since died without ever getting their money back from the savings scheme.

The letter said: "I can confirm that any dividends will be paid to the next of kin or, where applicable, the estate of the agent or customer."

About 122,000 customers made claims worth £38 million when Farepak went into administration in October 2006, losing an average of £400 each. Mr Weir, who is the MP for Angus, said about 20,000 of those were from Scotland.

Many of those affected by the collapse of the Wiltshire-based company were on low incomes. Customers paid in monthly sums to the firm or its agents to receive food hampers for Christmas.

In 2009, payments worth a total of £240,000 were sent to 5,900 customers whose money was put into trust by the firm just before it went into administration.

The compensation was paid after a court was asked to rule whether the trust, which was not set up properly, actually existed and who should be reimbursed. Those who placed their orders before the cut-off date were unaffected by the court's ruling and victims were told to expect just 5p for every pound spent.

Mr Weir said: "It is sad and unacceptable that, five years after Farepak collapsed, more than two hundred customers have died waiting to receive any of their money back. There is something seriously wrong when liquidations can take years to finalise and people are actually dying before the insolvency gravy train comes to a halt."

A Government spokesman said: "It is upsetting that some creditors have passed away while the liquidation process of Farepak is ongoing but the Government cannot intervene in the conduct of an insolvency and administrations may in any event be subject to scrutiny by the court.

"The liquidators of the company have agreed 116,439 agent and customer claims, totalling approximately £37 million, and work by the liquidators has resulted in the possible amount payable in the future to creditors increasing from 5p in the pound to 15p in the pound."

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