Lawyers bid to disqualify ex-bosses of Farepak as directors
A Government companies watchdog has asked a High Court judge to penalise directors of a Christmas hamper business which collapsed six years ago leaving tens of thousands of savers - including many from Northern Ireland - out of pocket.
Lawyers representing The Insolvency Service asked Mr Justice Peter Smith to disqualify former bosses at Farepak, and its parent firm, from being company directors. They said the judge had the power to impose bans of between two and 15 years.
The judge was told the Farepak collapse had not come "out of the blue" and that directors had traded at an "unreasonable risk".
Lawyers said that prior to the October 2006 collapse "about £1m a week" was coming in from Christmas savers who had "no inkling" of "any serious risk".
Former bosses are contesting disqualification applications by The Insolvency Service - which is part of the Department for Business, Innovation and Skills - at a High Court hearing in London expected to last several weeks.
Malcolm Davis-White QC, for The Insolvency Service, told Mr Justice Peter Smith that proceedings arose from the collapse of European Home Retail and its group, including Farepak Food -amp; Gifts.
"The proceedings, seeking disqualification orders, are brought against directors of the holding company European Home Retail and its subsidiary Farepak Food -amp; Gifts. They concern approximately the last year or so of trading of Farepak and the group," he said in written submissions.
"Farepak was the well-known supplier of Christmas hampers and gift vouchers to members of the public who saved on a weekly basis during the year for such goods to be delivered for the Christmas period."
He said following the collapse, claims by customers - and "agents" - against Farepak amounted to about £37m.
Mr Davis-White said The Insolvency Service was making "allegations of unfit conduct" and arguing directors had caused or permitted either EHR or Farepak to "trade at the unreasonable risk of its creditors".