Fifty per cent for Borders Farepak customers
David Knox • Published 13 Jul 2012 09:00
BORDERS MP Michael Moore has welcomed this week's development which will see former Farepak customers receive almost half of the money they lost.
Close to 400 Borderers were hit in 2006 when the Christmas savings firm collapsed - many losing close to £500.
At the time, the 114,000 customers from all over the UK received only 17.5 per cent compensation from the Farepak Response Fund charity, set up by the government.
But almost six years on, liquidators BDO have now confirmed that an additional payment of about 32 per cent will be made at the end of August to those affected.
Mr Moore said: "I worked very closely with Borderers who were affected by the collapse of Fairpak in 2006 and during the special surgeries and questionnaires I held, I met many people who had lost hundreds of pounds.
"After six years of waiting, news that customers will receive around half the money they lost is absolutely brilliant news. Although we would want them to be reimbursed 100 per cent, I appreciate that in the circumstances this is the best outcome we could have hoped for."
Swindon-based Farepak collapsed in 2006, leaving 114,000 people with total losses of £37m.
Farepak's demise left no money available to creditors.
However, BDO has confirmed that a payment of about 32p in the pound will now be made, which includes a share of an £8m payment from Lloyds Banking Group.
The government's Insolvency Service had argued that the high-profile collapse of Farepak had been the fault of nine former directors of the company.
At a High Court hearing earlier this year, the service had to admit that its case did not stand up, and the action was dropped.
The judge argued that HBOS bank had taken a hardball attitude in dealing with the company and was partially to blame. This led to Lloyds Banking Group, which now owns HBOS, to make the £8m payment to the Farepak compensation fund.
Mr Moore added: "I want to encourage those affected to ensure they receive the compensation due and those who have changed their address have been urged to inform the Farepak claims management team."
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