Anger as compensation hopes fade

Customers have been protesting at Farepak's HQ near Swindon Watch: Our full report Christmas gloom for 100,000 Customers 'not protected'

Emails from viewers angry at losing their Christmas savings have continued to pour into the Working Lunch inbox.

Within 48 hours of featuring the collapse of hamper company Farepak, the programme had received over 100 emails, with losses totalling over £200,000.

Farepak fiasco: Your stories

Earlier in the week several angry customers blocked the entrance to the Farepak site near Swindon, demanding their money back.

Company administrators must follow a strict 'hierarchy of claimants' when making payments to creditors.

Bank debt

Unfortunately for Farepak customers, they sit near the bottom of this list, with employees and most bank debt paid first.

Should enough money be found in the business, £600,000 is supposed to be made available to 'unsecured creditors', including customers.

But with thousands of people out of pocket this would amount to no more than a token payment.

HIERARCHY OF CLAIMANTS 1 - Administrators 2 - Secured creditors - 'fixed charge' 3 - Unsecured creditors (£600,000 only) 4 - Preferential creditors - including employees 5 - Secured creditors - 'floating charge' 6 - Unsecured creditors - including customers 7 - Shareholders

For those thinking of joining similar schemes in future, Trading Standards advise the use of a credit card wherever possible.

Protected

Credit card purchases of over £100 are protected under the provisions of the Consumer Credit Act 1974.

They also suggest choosing bonded companies.

However, James Stonebridge, a corporate lawyer at Norton Rose warns that not all bonds are alike.

"In certain industry sectors bonds can be of great value, but in this instance it seems to have been no more than a token of intent."

Creditors

Money owed to Farepak's creditors far outweighs the company's £100,000 bond.

The company's customers and agents will be keenly awaiting further announcements from the administrators.

In the meantime it is worth keeping an eye on the HITA and Farepak websites to check for any new information.

Concerned customers and agents can register a claim in the following ways.

Telephone: [phone]

Fax: [phone]

Email: [e-mail]

Address: Farepak Food & Gifts Limited - In Administration
Kings Wharf
20-30 Kings Road
Reading
RG1 3EX

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