Farepak, the operator of a Christmas savings club for low-income customers, went into administration in October 2006, more than five years ago. This week it is widely reported (see, for example, in this Daily Telegraph article) that the professional advisers running the administration and subsequent liquidation have so far run up fees of £8.2 million. The administrators and liquidators are BDO, who are reported to have earned fees of £3.8 million; other advisers include law firms, insurers and (that quintessential mark of an advisory bean-feast) PR specialists.
Meanwhile, the former customers of Farepak will receive an estimated 15p for each £1 that they had saved into Farepak – meaning that the customers will receive an aggregate payment of £5.5 million, some 33% less than will be paid to the advisers.
And the Financial Times reports that the BDO is still not ready to pay the dividend to former customers “as it is pursuing other sources of funding that could bolster the pay-out”. The Daily Telegraph reports a BDO spokesman as follows:
“The administration and liquidation of Farepak is complex and has involved an exceptionally large number of creditors, the identities of which were unknown at the outset of the administration.”
We reported in February 2011 on the application by the Insolvency Service for disqualification orders against nine individuals in relation to their conduct as Farepak directors. That application is continuing.
Friendly Corporate PSL
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