Loans made by Farepak to parent company to be probed by BDO, and DTI to look into company's collapse
Accountancy Age, 20 Nov 2006
BDO Stoy Hayward, Farepak's receiver, is to look into the loans made through Christmas hamper monies to parent company European Home Retail, which may have caused the company's collapse.
The Christmas club received about ₤40m from 150 000 families and loaned ₤17m to its parent and sister companies by the time it went into administration, the Financial Times reported.
The Department of Trade and Industry will also investigate the collapse of the company, which may lead to disqualification of directors or further action against the company or anyone involved in running it.
EHR's chairman, Sir Clive Thompson has come out accusing HBOS of 'pulling the plug' on EHR.
The bank, however, has insisted it stood behind EHR when the company had 'significant financial problems'.
The company's auditors, Ernst & Young – who charged ₤144 000 in audit fees – raised no questions over whether Farepak or its parent, EHR, were likely to continue as going concerns when it signed off accounts for the year ending April 2005.
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