BDO LIQUIDATORS have announced that they will make a dividend payment to creditors at the end of August which will bring repayments to 50%.
Martha Thompson and Dermot Power, from BDO, were appointed joint liquidators to the collapsed Christmas hamper club last year.
The liquidators said that unsecured creditors, including customers, would receive about 32p for every £1 owed. The sum includes a previously negotiated dividend of about 13p and a £8m ex-gratia payment from Lloyds Banking Group.
This is in addition to a 17.5p dividend already handed over to customers and agents by the Farepak Response Fund, a charity set up by the Department of Trade and Industry in 2006.
Lloyds announced the goodwill payment of £8m after its subsidiary, HBOS, was dragged into a Farepak court hearing last month.
HBOS, which acted as a banker to Farepak, was criticised for forcing company directors to continue taking customer money when it knew that there were unlikely to get those funds back, the Financial Times reports.
The £8m is in addition to the £2m that HBOS made into the distress fund for Farepak victims.
It is estimated that the dividend payment to the estimated 114,000 customers will be made at the end of August. This also marks the end of the liquidation process.
Farepak collapsed owing more than £40m after its parent company, European Home Retail, went into administration in 2006.
A statement from Lloyds Banking Group said: “In light of recent comments from Mr Justice Smith on HBOS’s involvement with EHR and Farepak, Lloyds Banking Group has decided to make an ex-gratia payment of £8m for Farepak’s former customers.
“This donation is in addition to the £2m donated by HBOS when Farepak failed in 2006. We are now working to ensure that this money goes directly to those customers. While HBOS acted legally in its dealing with the company, as the judge himself acknowledged, we are mindful that, in acquiring HBOS in 2009, the group took on not only its legal and financial obligations, but also wider responsibilities.
“We have a crucial role to play in supporting business and the communities in which we operate. In making our decision we have looked carefully at the very specific circumstances surrounding the failure of Farepak and the economic and social impact resulting from it.”
The fast-track move is a bold departure from the norm, as a probe would normally only begin several months after administrators had finished their own enquiries
Head of Editorial Kevin Reed looks at the week's news, including the BHS and Austin Reed administration, Accountex and much more.
MPs launch probe into the sale of BHS that will look at role of auditors and accountancy firms in sale process
A short moratorium will give struggling companies a chance to be open with their creditors and negotiate a way out of their problems transparently, says Sykes