Farepak judge points finger at bank
A High Court judge has pointed the finger at a bank as he analysed the demise of a Christmas hamper business which collapsed leaving tens of thousands of savers out of pocket.Mr Justice Peter Smith suggested that HBOS bosses sat like "stookies" - a Scottish slang term for plaster casts - when Farepak was failing six years ago
He compared HBOS's "hardball approach" to the conduct of Farepak bosses, who had done "everything possible" to save the firm.
The judge was speaking at a High Court hearing in London after a Government companies watchdog abandoned attempts to penalise former Farepak bosses by having them barred from being company directors.
Lawyers representing the Insolvency Service - part of the department headed by Business Secretary Vince Cable - halted litigation after "consideration of evidence" given at a High Court trial which started in London nearly a month ago.
Mr Justice Peter Smith said he had decided to make a statement because of the public interest in Farepak's downfall. He said HBOS would provide no more money, was "fully covered" and recovered loans after Farepak collapsed.
"This in my view coloured the approach of HBOS and basically they were going to sit there - and I can use... a Glaswegian expression - like stookies, doing nothing which involves any reduction of their recoveries," he said.
"It is striking that during the whole of the period it appears, in rough and ready terms, that further investment from the bank of between £3 million to £5 million would have probably saved the Group, but the HBOS was not prepared to make it.
"It of course was perfectly entitled to do what it did and to continue to require the company to collect deposits, knowing full well that those depositors would not get their money back if the companies went into insolvency and knowing full well that those deposits would have benefited the bank alone. This is of course in my view completely contrary to the way in which these defendants (former Farepak bosses) conducted themselves. They did everything, as far as I can see, possible to save the group."
Mr Justice Peter Smith said lawyers representing the Insolvency Service had been right to abandon attempts to have former Farepak bosses barred from being directors. He said there was "no reasonable prospect" of success. "What is missing from that story is any justified complaint against these defendants," the judge said.
"It is not usual to make a statement but I felt strongly in this case that all the depositors would have been left with a sense of being cheated again if they did not understand why the case has collapsed against the people who have been pursued for the last five years as being the evil people who caused their losses."
Mr Justice Peter Smith said he had decided to make a statement because of the public interest in Farepak's downfall. He said HBOS would provide no more money, was "fully covered" and recovered loans after Farepak collapsed.
"This in my view coloured the approach of HBOS and basically they were going to sit there - and I can use... a Glaswegian expression - like stookies, doing nothing which involves any reduction of their recoveries," he said.
"It is striking that during the whole of the period it appears, in rough and ready terms, that further investment from the bank of between £3 million to £5 million would have probably saved the Group, but the HBOS was not prepared to make it.
"It of course was perfectly entitled to do what it did and to continue to require the company to collect deposits, knowing full well that those depositors would not get their money back if the companies went into insolvency and knowing full well that those deposits would have benefited the bank alone. This is of course in my view completely contrary to the way in which these defendants (former Farepak bosses) conducted themselves. They did everything, as far as I can see, possible to save the group."
Mr Justice Peter Smith said lawyers representing the Insolvency Service had been right to abandon attempts to have former Farepak bosses barred from being directors. He said there was "no reasonable prospect" of success. "What is missing from that story is any justified complaint against these defendants," the judge said.
"It is not usual to make a statement but I felt strongly in this case that all the depositors would have been left with a sense of being cheated again if they did not understand why the case has collapsed against the people who have been pursued for the last five years as being the evil people who caused their losses."
© 2013 Press Association