The Story So Far...
Farepak Hampers began trading in 1969 from Westmead Drive, Westlea Swindon. In 2004 Farepak employed 130 staff and during hamper production an additional 150 temporary packers. By 2006 the number of employees had dropped to 20 with 75 additional temporary packers to be taken on at the Christmas period.
Farepak Hampers origins can be traced back as far as 1935. Bob Johnson was appointed Managing Director with 500 Agents of this small Christmas savings club in 1969 which operated out of a butchers shop in Peckham.
Kleeneze Homecare had been operating since 1923 (now Kleeneze UK) and was acquired by Farepak in 1995. Farepak changed its name to Kleeneze plc and at this time extracted the central part of their business to its subsidiary Farepak Food & Gifts Limited. Kleeneze plc changed its name to European Home Retail plc (EHR) in 2006.
On 30 June 2006 an announcement was posted on EHR’s website advising that their existing funding would not last past autumn and they would accordingly be seeking extra funding. The Hamper Industry Trade Association (HITA) of which Farepak were a member immediately contacted the Directors and were given assurances that the extra funding required would be forthcoming.
EHR’s shares were suspended from trading on the Stock Exchange on 23 August 2006. Again, HITA contacted the Directors and asked if Farepak customers’ payments would be ring-fenced, only to be advised that this was not necessary. Thereafter, on Friday 13 October 2006 Farepak Food & Gifts Limited, a subsidiary of European Retail Limited had an Administrator appointed following a rejection of a final proposal from their Bank, HBOS (Halifax Bank of Scotland). This led to the whole company, European Retail Limited being forced into Administration.
Farepak and other companies like it are a convenient way to save for Christmas by ordering your goods in the January and paying a weekly payment thereafter for 45 weeks. Customers could either deal direct with Farepak or become an Agent and secure their own client base who would normally be family, friends and work colleagues. In becoming an Agent they would receive a % of commission of their sales which could either be taken off their bill at the end of September, taken in goods or alternatively they could have a cheque sent to them. Farepak was developed originally as a traditional Christmas Hamper company and grew to be one of the largest Christmas saving schemes in the country. Thousands of customers used Farepak for their range of hampers, gifts and shopping vouchers.
As Farepak stated themselves “We use the experience and knowledge of our friendly staff to ensure that our Agents receive hampers that contain the best branded products and the freshest meats, at great value prices”.
Farepak further went on to state “As one of the founding members of the Hamper Industry Trade Association, we adhere to the HITA Code of Practice to ensure the security of your savings and the safe delivery of your hampers and gifts”.
As all Agents and customers of Farepak will now know the aforementioned statement was a false promise and Friday the 13th 2006 will almost certainly be remembered by thousands of people in Britain who had Christmas 2006 literally taken out of their hands.
Prior to 15 September 2003 far to much protection was given to secured creditors in particular that a Receiver could be appointed who would look out for the interests of the secured creditor only. With this in mind, the government passed the Enterprise Act 2002 which took effect on 15 September 2003. This Act was designed to give companies some breathing space and to delay or prevent liquidation (the death of the company). Accordingly, since the Enterprise Act 2002 Administrators are appointed and their duty it is to look at the company as a whole which is good news for unsecured creditors. Furthermore, the government withdrew themselves as a preferential creditor after the passing of the Enterprise Act 2002.
An Administrator is, as the word suggests, there to administer the affairs of the company. BDO Stoy Hayward have been appointed Administrators of Farepak Food & Gifts Limited. An Administrator must be a qualified or authorised insolvency practitioner. The powers of the Administrator are vast. They have the power to do whatever is necessary for the management of the company’s affairs, business or property. The can take possession and dispose of company’s property. They can remove and appoint directors and furthermore investigate the company’s affairs. The Administrator must give some indication as to how the company arrived the position it is now in.
Shortly after the administration order was made public, many people began to scour the internet for further information on what happened, and what could be done about the situation. To this end, a forum was set up at http://www.unfairpak.co.uk/forum/ and there is certainly a wealth of information to be found there, along with a helpful a supportive community and practical advice on what to do.
Visit www.unfairpak.co.uk for more information and www.unfairpak.co.uk/forum/ for advice and support
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