Court Details for 20 June 2012 Farepak Directors Trial

    COURT 26


Wednesday, 20 June 2012

At half past 10


Part Heard

584 of 2011 In the matter of European Home Retail plc and in the matter of Farepak Food & Gifts Ltd

2 thoughts on “Court Details for 20 June 2012 Farepak Directors Trial

  1. Shortly after the evidence from HBOS was presented the judge overseeing the case Mr Justice Smith told lawyers acting for the Business Secretary to go away & “consider what had survived of their case”. After a delay in proceedings on Wednesday morning, the case was dropped.

    Mr Cable said he felt “huge” sympathy for “those who lost out” & would reflect on the decision by the Insolvency Service – which is part of his department.

    The case has cost all the parties millions of pounds. The Department for Business is understood to have spent in excess of £1m on the legal proceedings. HBOS’s costs, which could yet be paid out of what little is left of Farepak’s creditor funds, are moreover in the region of £1m.

    The case against the five Farepak directors flowed from a five-year investigation by the Insolvency Service into the £34m collapse of the savings company. Particular attention was drawn to the fact that over £1m in deposits was flowing into the company just weeks before it went under.

    However, rather than gladly accepting the money it was revealed this week the directors had done their best to protect the cash, yet been turned down by HBOS.

    “That means that the bank [HBOS] is £4m plus better off during that period,” said Mr Justice Smith on Tuesday.

    HBOS’s £31m loan to Farepak was repaid in full. Savers were offered just 15p in the £1.

    It was moreover revealed that Peter Cummings, the former head of HBOS’s investment bank, had been the “ultimate arbiter” of what had happened with Farepak.

    Mr Cummings is himself fighting being debarred from working in the City by the Financial Services Authority in relation to his work with HBOS.

    Mr Justice Smith is expected to make a statement to court this morning. He said Farepak’s customers deserved to be told what had happened in the case. A ruling on Friday could lead to millions of pounds of costs being apportioned.

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