Recalling Farepak, its 150,000 customers and Myleene Klass’s bikini

With Christmas just days away we look back to an unhappy period building up to the big day in 2006 when the Christmas hamper savings group Farepak went bust.

Around 150,000 customers of the firm were left out of pocket and without their promised Christmas goodies from what was in fact a subsidiary of the European Home Retail (EHR) who had failed to pay back a loan of £33m to Farepak.

Creditors that included members of the public who saved up for Christmas with Farepak were left counting the cost to a tune of £50m. It later emerged Farepak was solvent at the time of the October administration but were forced into liquidation by EHR’s bank HBOS who called in their lending by seizing the savings of Farepak’s customers. Their money had been thought to have been held in trust by Farepak but legally the bank could simply help themselves to the cash – an action that was heavily criticized by the subsequent enquiry.

Farepak has been an institution for many families since it began in 1935 when money was short for many people. Over the years mainly low income families saw the weekly savings plan an ideal way to fund Christmas and since the system worked so well they stuck with it in an industry that had many such firms operating.

Based in Warmley near Bristol Farepak had issued warnings through the summer of 2006 that there were problems – a fact picked up earlier that year by ICSM Credit who began warning members of trouble ahead.

Ian Carrotte of ICSM Credit said: “It was a disaster for the thousands of families who simple had their Christmas cancelled but also for the printers, wholesalers, couriers and suppliers of Farepak. It was a classic case of a famous name thought to be too big to fall so some continued trading with Farepak up until the end.”

Following the collapse there was political fall-out that damaged the then Labour Government, along with criticism of HBOS, the directors of Farepak and of regulations that could allow the public’s cash to be lost. It was in a way a foretelling of the banking crisis that soon followed in 2007 and the Credit Crunch of 2007-2008 which saw thousands lose their jobs as firms crashed. The one bright light was how many companies and millions of people chipped into a fund to help the savers who had lost out. Among them was the singer Myleene Klass who auctioned her bikini from I’m a Celebrity for £7,000. Eventually the savers received half of their lost cash but only after a long legal struggle and fundraising by the public.

With Christmas upon us it is a timely reminder that firms that you imagined were safe can go bust so the high quality credit intelligence from ICSM Credit is vital to have.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

Picture from Huffington Post.