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Farepak court case collapses
THE HIGH Court case against the directors of the collapsed Christmas catalogue company Farepak has been scrapped.
Business Secretary Vince Cable has said he was “deeply disappointed” after a Government companies watchdog abandoned a bid to penalise directors of the Swindon-based company which collapsed six years ago leaving tens of thousands of savers out of pocket.
The Insolvency Service said it was discontinuing High Court action against former bosses at Farepak and its parent firm.
Mr Cable said he felt “huge” sympathy for “those who lost out” and would reflect on the decision by the Insolvency Service – which is part of his department.
A High Court judge began hearing evidence in May following the start of a trial in London.
Lawyers representing the Insolvency Service had asked Mr Justice Peter Smith to disqualify former bosses at Farepak – and its parent firm – from being company directors. Former bosses contested the disqualification applications. The Insolvency Service yesterday announced the end of the litigation in a statement.
An Insolvency Service spokeswoman said: “The Insolvency Service, acting on behalf of the Secretary of State for Business, Innovation and Skills and on advice of counsel, will discontinue the proceedings against the directors of Farepak and European Home Retail plc. This decision is based on consideration of evidence given to the court to date.”
Mr Cable said, in a statement: “I am deeply disappointed by today’s events and feel a huge amount of sympathy for those who lost out when the company went bankrupt.
“We need to reflect on this result, consider what options are on the table and seek further legal advice if needed.”
Lawyers said Mr Justice Peter Smith would make a statement in court tomorrow. Insolvency Service lawyers said legal action had been started against a number of defendants.
Former bosses were named on court papers as Stevan Fowler, Neil Gillis, Nicholas Gilodi-Johnson, Stephen Hicks, Michael Johns, Paul Munn, Joanne Ponting, William Rollason and Sir Clive Thompson, a former president of the Confederation of British Industry and ex-chief executive of Rentokil.
Malcolm Davis-White QC, for the Insolvency Service, said in written submissions to the judge that Mr Hicks and Mrs Ponting had each offered disqualification undertakings which had been accepted.
The Insolvency Service told the judge that the Farepak collapse had not come out of the blue. Lawyers alleged that directors traded at an “unreasonable risk”. They said that prior to the October 2006 collapse, about £1m a week was coming in from Christmas savers who had “no inkling” of any risk.
They said the judge had the power to impose bans of between two and 15 years. Former Farepak bosses disputed allegations. Lawyers representing ex-directors told the judge, in written submissions, that evidence “singularly failed” to establish a case for disqualification.