Trial of Farepak Directors Day 2 – 25 May 2012

It was a very quiet day today which Unfairpak were completely surprised about given the fact that the directors written submissions were being set out in court.

All we got in the way of submissions were very basic and lacklustre.

However, the written submissions that we do have are as follows:-

Both William Rollason and Stevan Fowler who are, as we reported yesterday, being represented by the same firm, stated in written submissions that the government’s case “is heavily dependent on hindsight” and “is both misconceived legally and incoherent factually”.

Nicholas Gilodi-Johnson’s written submissions stated “There was at all times a reasonable prospect of avoiding an insolvency. The directors made the right decisions at the right time.”

Sir Clive Thompson and the three non executives written submissions claim that when examined in context: “each of them did as much as should reasonably been, and be, expected of them”.

The hearing of evidence begins this Monday, 28 May 2012.

FAREPAK DIRECTORS’ TRIAL DAY 1 – 24 MAY 2012

As advised by Unfairpak, the trial is set down for 6 to 8 weeks.

It got off to a slow start today, 24 May 2012, with the Secretary of State giving opening submissions before Mr Justice Peter Smith and advising him that he had the power to disqualify them from being directors from between 2 to 15 years.

In written submissions, Malcolm Davis-White QC, acting on behalf of the Insolvency Service stated “The proceedings, seeking disqualification orders, are brought against directors of the holding company European Home Retail and its subsidiary Farepak Food & Gifts. They concern approximately the last year or so of trading of Farepak and the group.”  Mr Justice Peter Smith was also told that the directors had traded at an “unreasonable risk” and that the collapse of Farepak Food & Gifts Limited had not came “out of the blue”.

Accordingly, the Insolvency Service are making “allegations of unfit conduct” and are arguing that the directors of European Home Retail (hereainafter referred to as “EHR”) or Farepak Food & Gifts Limited allowed or caused said companies to “trade at the unreasonable risk of its creditors”.

As Unfairpak exclusively revealed to the Sunday Herald on 12 February 2012, two former directors of Farepak Food & Gifts Limited have already taken voluntary disqualification.  Joanne Ponting and Stephen Hicks both took voluntary disqualification in 2011.

Michael Johns who was a non executive director at the time of the collapse is a senior partner with the London firm K&L Gates and is being represented by said company.  Neil Gillis and Paul Munn, Farepak directors and Sir Clive Thompson, former chairman are also being represented by said firm with Paul Girolami QC of Maitland Chambers instructed as counsel.

Richard Highley dispute resolution partner of DAC Beachcroft is acting for William Rollason and Steven Fowler with Michael Green QC of Fountain Court alongside.

The commercial dispute resolution partner of Nabarro has instructed Philip Jones QC of Serle Chambers to act for Nicholas Gilodi-Johnson, Farepak Food & Gifts Limited’s former managing director.

Lawyers for the Insolvency Service also pointed out that prior to the collapse on Friday 13 October 2006, “about £1 million a week” was coming in from Farepak savers who had “no inkling” of “any serious risk”.

Mr Davis-White also pointed out that company financial forecasts in November 2005 “identified a risk” that Farepak Food & Gifts Limited would not have enough monies to pay Choice Gift Vouchers, their main supplier.  Choice Gift Vouchers Limited entered administration on Tuesday 31 January 2006 having being paid approximately half of the £12.1 million owed to them by Farepak Food & Gifts Limited.

“With alarming cashflow projections available from early April 2006 warning of a lack of sufficient cash in the group from October 2006 onwards, various unsuccessful attempts were made by the group to find a solution to the funding crisis,” Mr Davis-White added.

“Throughout this period, savers’ weekly payments (amounting by October to some £2million per week) continued to be collected by Farepak and swept up daily into the group account, unprotected by any trust account or similar arrangement.”

“By the time Farepak ceased to accept savers’ money on October 11 2006, it had ordered no vouchers for Christmas 2006. On October 13 2006 European Home Retail and a number of its subsidiaries including Farepak entered (variously) administration and administrative receivership.”

Mr Davis-White also went on to point out that Farepak’s creditors were also savers.  He further went on to state that “we say you have to look at the overall financial position and the risk.  We say it is relevant that your creditors are savers. It should help you shape more carefully how you deal with things. It is all very well saying ‘they are creditors like any other’ but, in our respectful submission, they are not simply creditors like any other.”

Counsel will deliver opening submissions on behalf of the defendants tomorrow, 25 May 2012 and the court will begin hearing evidence on Monday, 28 May 2012.

 

 

 

VOLUNTARY DISQUALIFICATION

Instead of answering each email individually, we feel it is better to put a post here to explain the situation regarding voluntary disqualification.

At the present moment in time, two former directors of Farepak have taken voluntary disqualification and we have a post regarding this on our blog.

As far as we are aware, no other directors of Farepak have taken this route and the trial is still set down to go ahead this Thursday 24 May 2012.

However, it is possible for the directors to even get to the court on Thursday and decide there and then that they will take voluntary disqualification.  Unfairpak cannot comment whether or not this will in fact happen.  All we can say is that it is a possibility.

If directors take voluntary disqualification, they are likely to be dealt with more leniently by the court.

We shall keep you informed regarding any further information we receive but at this moment in time, 7 directors are still facing trial.

TWITTER

For some unknown reason our @unfairpak account has been suspended.  We have contacted Twitter but reading Google regarding suspended accounts suggests we may have to wait a while until the matter is resolved.

Until we can get @unfairpak back up and running, you can follow our National Campaign Co-ordinator, Suzy Hall @scotsgirlie as she is following all the up to date news regarding the trial of the Directors of Farepak and providing information regarding the liquidation of Farepak Food & Gifts Limited.

Unfairpak would like to apologise to our followers and we hope that Twitter can resolve the issue as soon as possible.  We shall inform you as soon as we are up and running again.

COMPANY SECRETARY

In response to the various emails enquiring whether directors of companies can become company secretaries if they are disqualified, the facts are as follows.

From 6 April 2008 private limited companies have the right to choose whether or not they wish to have a company secretary.  If they already have a company secretary and wish to dispense with same, they need to inform Companies House.  Any company setting up business after 6 April 2008 can decide whether or not they wish a company secretary.

For the avoidance of doubt, a Public Limited Company MUST have a company secretary.

If a company chooses to have a secretary, the secretary basically deals with administrative procedures leaving the directors to run the company business.  Under the Companies Act 2006 there are no specific duties set down for company secretaries as these will usually be contained in a employment contract.  However, a company secretary, if appointed, will usually undertake the following duties; (1) maintaining the statutory registers which are; (i) the register of members; (ii) the register of directors and secretaries; (iii) the register of directors’ interests; (iv) the register of charges; and (v) for public companies only, the register of interests in shares.  The company secretary again, if appointed, will also be responsible for ensuring statutory forms are filed properly, providing member and auditors with notice of meetings, sending Companies House copies of resolutions and agreements, keeping minutes of directors meetings and general meetings and ensuring that people who are entitled to do so, can inspect company records.

If there is not a company secretary appointed, the aforementioned duties must still be carried out by either a director or someone authorised by a director to do same.

As you can see from the above, a company secretary albeit an important job, is an administrative role.  A disqualified director may become a company secretary but if he/she were found to be acting in anyway in the management of the company, he/she would then be committing a criminal offence and could face a jail period of up to 2 years as well as a fine and further disqualification period.

If anyone requires any further information, please do not hesitate to add your comments below.

 

PRESS RELEASE

UNFAIRPAK

 

PRESS RELEASE: FOR IMMEDIATE RELEASE

 

FAREPAK DIRECTORS TO FACE TRIAL

 

For over 5 long years we have continually campaigned to help victims of Farepak and give factual information regarding every single aspect of Farepak Food & Gifts Limited.

 

The trial of seven Directors starts on 21 May 2012.  This will take place in the High Court,London.

 

Unfairpak have always stood for good, quality and accurate reporting and to that end, we have updated Unfairpak with a live Twitter feed in order that we can hopefully report the happenings from the Court in real time, in one place; a blog that we shall update each day summing up what has happened within the Court; and contact details should you require any help or support.

 

Our Forum remains intact and you can still find all information and updates regarding the liquidation of Farepak Food & Gifts Limited there.

 

WELCOME

Hello and welcome to the new and improved, updated Unfairpak site.

For over 5 years we have strived to help Farepak victims firstly with their plans on how to save Christmas 2006 and thereafter to help with the administration/liquidation of Farepak.

We have now reached the point whereby the remaining directors of Farepak will now defend the action taken by the Insolvency Service upon the instruction of Vince Cable at the High Court beginning Monday 21 May 2012.  The trial is set down for approximately 6 weeks and we will be here every step of the way to offer any advice/help you may need in relation to same.

We will also continue to keep you updated regarding the liquidation of Farepak Food & Gifts Limited.

Our Forum is still in place.  We have just added Twitter and a new blog so that we can keep you updated in real time of the happenings within the Court.

We have always strived to do our best and will continue to do so and all of Unfairpak would like to thank Paul Sergeant for the hard work he has done to keep Unfairpak running, up to date and now current in the world of fabulous technology.

Look forward to welcoming members old and new.

The Unfairpak Team!!!