Saturday, October 21, 2006

Festivities Hampered

I took a call at work on Monday this week about the collapse of a company called 'Farepak', which helped people to save throughout the year for Christmas hampers and vouchers. The administrators called in to try and salvage what they can from the company are warning customers that they will not get their orders, and that they might have to wait for months to see if they get any money back at all.

It's a catastrophe for thousands of families, some of whom will now face having to explain what no parent should ever have to explain to a child - that Christmas won't be coming this year. What makes my blood absolutely boil, though, is the information I found while having a trawl online to find out more about those behind Farepak.

It seems that the parent company, European Home Retail, had been up the creek for months. They suspended trade in their shares in August and as recently as 6 October, sold off a few of their remaining businesses (Kitbag, I Want One Of, 40% of Home Farm Hampers, and Kleeneze UK) for £34m. In spite of this, they carried on collecting money from Farepak customers, for hampers which they almost certainly knew they had no chance of being able to supply.

Whenever a company goes into administration, there is a strict pecking order if it needs to be wound up. First to get paid are the administrators themselves, followed by secured creditors, preferential creditors like the Inland Revenue, followed by the employees then everyone else ranked equally. Sadly, that probably means that some of the poorest families stand to get virtually nothing back in time for Christmas.

I've heard that the amount involved in Scotland alone comes to almost £8 million. However, even getting back a small proportion of that could make the difference this year for a lot of families. It's maybe asking too much for any wealthy individuals to come to the rescue here. Nevertheless, assuming that enough can be recovered, wouldn't it be good if the government could agree to use its entitlement to help compensate those who have lost out most?

If you've been affected by the Farepak collapse, this website gives some useful tips on how you can try to make the best of the situation.

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