[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Friday, 19 January 2007, 12:24 GMT
Farepak 'faces claims worth 38m'
Closed gates at Farepak depot
Some people lost as much as 2,000 when Farepak collapsed
Administrators dealing with collapsed Christmas savings club Farepak have received claims for 38m.

A total of 113,000 customers and agents have made claims so far, BDO Stoy Hayward said in a report to creditors.

It also warned victims they would get no more than 5p in every pound they lost when the firm failed. More than 150,000 people lost an average of 400.

The report also blames Farepak's collapse on its failure to "adequately" ringfence cash paid in by customers.

"It is clear that Farepak did not protect the money paid in by agents and customers," the BDO Stoy Hayward report added.

The administrators explained that Farepak's collapse was triggered by the fact 33m it lent to its parent company European Home Retail (EHR) was not paid back.


Administrators now hope to move the firm into voluntary liquidation - which would allow its assets to be sold and turned into cash to pay off creditors.

BDO Stoy Hayward added the move would also allow liquidators to investigate the collapse and sue "any parties responsible or liable" for its failure, and redistribute any money made from legal action to creditors.

Farepak customers paid monthly sums to the firm or its agents towards vouchers or food hampers for the festive season.

However, when the company went into administration in October it left them with limited hopes of compensation.

A voluntary fund set up in the run-up to Christmas raised about 7m to mitigate the effect of the collapse on savers.

Legal hitch

But last month, members of the savings club were hit by a further setback after a High Court judge deferred some payments owed to members.

At stake was the legal status of money accrued between the collapse of Farepak and the time it went into administration soon after.

If successful, savers would have received sums ranging from 17 to 1,500.

A judgement in the case is due later this year.

Meanwhile, the Treasury has vowed to launch a review of Christmas saving clubs and the lack of regulations governing them - a move prompted by Farepak's collapse.

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific