Farepak "hung out to dry" by bankers

12-11-2006

Farepak
The chairman of collapsed Christmas savings club Farepak has claimed that the company was "hung out to dry" by its bankers, according to a report.

In an apparent attempt to deflect criticism away from the management of the Swindon-based hamper firm following its collapse, the Sunday Telegraph quotes Sir Clive Thompson as saying that Farepak was forced into administration because the Halifax Bank of Scotland (HBOS) refused to help with a £1.5 million funding shortfall.

Sir Clive was fiercely criticised by MPs during a parliamentary debate into the collapse of Farepak last week, when parliamentarians expressed concern that their constituents had been left out of pocket following the collapse of the savings scheme.

An emergency fund has subsequently been established in conjunction with a government-funded charity to help the thousands of families who have lost millions of pounds between them following the collapse of Farepak, which has left many facing a bleak Christmas.

The Farepak Response Fund will make grants to those households affected, while the Department for Trade and Industry (DTI) has launched an investigation into the collapse of the firm amid a contentious debate about who is responsible for savers having lost the money that they invested in the company's hamper scheme.

Speaking for the first time since the company's collapse, Farepak chairman Sir Clive claimed that HBOS, banker to the firm's parent company European Home Retail (EHR), was "unsympathetic" to its financial difficulties.

According to the Sunday Telegraph, the former Rentokil chairman claimed that HBOS had refused to address a £1.5 million financial shortfall faced by Farepak and had rejected two requests from the company's directors to ring-fence savers' money in the summer, prior to its collapse.

Sir Clive, who said that he was "disgusted" by the treatment Farepak had received from its bankers, also claimed that HBOS had rejected five rescue packages that were put forward for consideration by the company between May and October.

"I have remained silent on this issue for too long," said the Farepak chairman.

Sir Clive's claims were rejected by HBOS, which stressed that it had supported the company throughout.

"There is a world of difference between a proposal and a viable solution," said a spokesman for the banking group.

In comments cited by the Sunday Telegraph, the spokesman added that requests by Farepak to ring fence savers' money were "not serious".

"The fact is that there was no money to ring-fence because the money was used by EHR as working capital," he claimed.


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