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Farepak

Volume 451: debated on Monday 30 October 2006

To ask the Secretary of State for Trade and Industry if he will investigate the circumstances surrounding the administration of hamper company Farepak. (96367)

I cannot make any comment on the particular case but I do sympathise with any customers who may lose money they have invested with Farepak.

The company went into administration on 13 October and my right hon. Friend the Minister of State for Trade has already been in contact with the administrators.

The administrators have a statutory duty to report to the Secretary of State for Trade and Industry if they consider that the conduct of any of the directors makes them unfit to be the directors of a limited company. The Secretary of State then has a discretionary power to seek to have the directors disqualified if it appears to him to be in the public interest. My right hon. Friend hopes hon. Members will appreciate that these are very early days in the administration. If any Member has constituents with concerns about the conduct of the company's affairs, they should contact the administrators.

To ask the Secretary of State for Trade and Industry if he will make a statement on the circumstances surrounding the collapse of Farepak; whether the company continued to collect payments from families after being declared bankrupt; and what steps he is taking to assess what lessons can be learnt for the future. (96832)

[holding answer 25 October 2006]: First let me say that I sympathise with any customers who may lose money as a result of this failure of Farepak.

The company went into administration on 13 October and my right hon. Friend the Minister for Trade met the administrators on 21 October to discuss the situation. They told him that they are working hard to establish the extent of the company's liabilities and the whereabouts of any assets.

The administrators have a statutory duty to report to the Secretary of State for Trade and Industry if they consider that the conduct of any of the directors makes them unfit to be the directors of a limited company. My right hon. Friend the Secretary of State then has a discretionary power to seek to have the directors disqualified if it appears to him to be in the public interest.

Also, directors do not enjoy absolute immunity from personal liability when a company goes into liquidation. If there is evidence in liquidation cases to indicate that there has been fraudulent or wrongful trading, a liquidator can ask the court to declare that those responsible should make a personal contribution towards the assets of the company.

My right hon. Friend hopes hon. Members will appreciate that these are very early days in the administration. If any Member has constituents with concerns about the conduct of the company's affairs, they should contact the administrators.

My right hon. Friend has also asked officials to make further inquiries as to the circumstances of the company's failure.

My right hon. Friend has been discussing with the British Retail Consortium the possibility of their members making some form of goodwill gesture to the customers of Farepak who have lost the money they had been saving towards Christmas. I am pleased to say that the BRC has accepted in principle this suggestion, given the exceptional circumstances, and are contacting their members to consider further the practical steps required. This will not be a compensation package, and members of the BRC are under no legal obligation to provide any help, but they have had a lot of interest from many large retailers, who are keen to try and do something, and I am grateful to them for their co-operation.

To ask the Secretary of State for Trade and Industry what response he has had from the British Retail Consortium to his inquiry about support for those affected by the collapse of Farepak. (96833)

[holding answer 25 October 2006]: I have great sympathy for those people who have lost money they saved over the year as a result of the collapse of Farepak and feel badly let down.

My right hon. Friend the Minister of State for Trade met the British Retail Consortium (BRC) and administrators of Farepak on 21 October to assess the level of the problem caused by the company going into administration.

It was a productive meeting and the BRC accepted in principle the idea of a goodwill gesture, given the exceptional circumstances surrounding Christmas. The discussion focused on the number of people affected and how my right hon. Friend wants to ensure that any package would be simple, not derisory, fraud free, easy to administer at store level and providing as much choice as possible for the customers to shop where they want.

This will not be a compensation package and members of the BRC are under no legal obligation to provide any help but they have had a lot of interest from many large retailers, who are keen to try and do something. The BRC is in discussion with its members so that retailers can decide what they might be able to provide and to consider further the practical steps required to take this matter further.

My right hon. Friend would like to thank personally both the Administrators and the BRC for their co-operation so far.

In the meantime, customers who have paid money to Farepak either directly or through an agent should contact the Administrators, BDO Stoy Hayward, to register a claim. Contact details are:

Website: www.farepak.co.uk

Telephone: 0870 830 6010

Fax: 01793 606057

E-mail: customer.claims@farepak.co.uk

Postal: Farepak Food & Gifts Limited—In Administration

Kings Wharf

20-30 Kings Road

Reading

RG1 3EX

Customers should ensure that their payment books are up to date and that they retain the books as evidence of their claim.

To ask the Secretary of State for Trade and Industry what representations he has received concerning the placing into administration of Farepak Food and Gifts Limited; and if he will make a statement. (97049)

I have great sympathy for those people who have lost money they saved over the year as a result of the collapse of Farepak and feel badly let down. There is wide public interest in this case and that has been reflected in a range of representations from individuals, MPs and business.

The company went into administration on 13 October. The administrators are required to act in the interests of all of the creditors and should seek the best outcome for them. They also have a statutory duty to report to the Secretary of State for Trade and Industry if they consider that the conduct of any of the directors makes them unfit to be the directors of a limited company. In addition, as the Secretary of State for Trade and Industry announced to the Trade and Industry Committee, an investigation under the Companies Act 1985 is now under way.

My right hon. Friend the Minister of State for Trade met the British Retail Consortium (BRC) and administrators of Farepak on 21 October to assess the level of the problem caused by the company going into administration.

It was a productive meeting and the BRC accepted in principle the idea of a goodwill gesture, given the exceptional circumstances surrounding Christmas. The discussion focused on the number of people affected and how my right hon. Friend wants to ensure that any package would be simple, not derisory, fraud free, easy to administer at store level and providing as much choice as possible for the customers to shop where they want.

This will not be a compensation package and members of the BRC are under no legal obligation to provide any help but they have had a lot of interest from many large retailers, who are keen to try and do something. The BRC is in discussion with its members so that retailers can decide what they might be able to provide and to consider further the practical steps required to take this matter further.

My right hon. Friend would like to thank personally both the Administrators and the BRC for their co-operation so far.

In the meantime, customers who have paid money to Farepak either directly or through an agent should contact the Administrators, BDO Stoy Hayward, to register a claim. Contact details are:

Website: www.farepak.co.uk

Telephone: 0870 830 6010

Fax: 01793 606057

Email:customer.claims@farepak.co.uk

Postal:Farepak Food and Gifts Limited—In Administration

Kings Wharf

20-30 Kings Road

Reading RG1 3EX

Customers should ensure that their payment books are up to date and that they retain the books as evidence of their claim.