By Daniel Hunter
Business Secretary Vince Cable today (Thursday) announced the next steps that the Government will take following the discontinuation of legal action against the former directors of Farepak on Wednesday 20 June 2012.
The Business Secretary announced that:
- He will meet a representative group of Farepak's creditors and MPs to discuss the case
- He has written to HBOS plc to ask for their views on the critical comments made about the bank by Justice Peter Smith, the judge in the case, and to clarify what actions the bank intends to take as a result of the comments. This includes consideration of a further contribution by the bank to the Farepak contribution fund
- He has written to the Financial Services Authority (FSA) seeking their views on the comments made by the judge on the conduct of HBOS plc in the period leading up to Farepak’s collapse.
While the discontinuation of the legal proceedings is disappointing the Business Secretary believes that the Government acted appropriately and in the public interest in taking action to disqualify the former directors of Farepak. The Insolvency Service will consider the implications of this case for future proceedings.
“This is a regrettable incident that has blighted so many people’s lives," Business Secretary Vince Cable said.
"I wish once again to express my regret and sympathy for the victims who have had this hanging over them for many years now. More than 100,000 people had their Christmas ruined when Farepak collapsed and some families have been seriously affected by the loss of their savings.
“This case was launched in July 2009, which was based on good legal advice and the Insolvency Service has had a very high success rate with disqualification actions. I want to stress that although disqualification proceedings have been dropped, the Government is considering the wider implications of the judge’s statement and the way forward.
“I will therefore be meeting representatives of the creditors and a selection of MPs in the coming days to discuss the case.
“Furthermore, I have written to the bank involved - HBOS - to seek their views on the statement of the judge in the case and to understand what the next steps might be, especially when it comes to the matter of increasing the compensation fund.
"I have also written to the FSA to seek their views on the comments made by the judge in respect of the bank."
The Farepak case seeking to disqualify seven directors was discontinued on 20 June 2012 when the Insolvency Service, on behalf of the Business Secretary, took legal advice and decided to discontinue the legal proceedings in the public interest.
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