HBOS ‘sat like stookies’ and allowed Farepak to fail, judge rules
A HIGH Court judge has pointed the finger of blame 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 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 yesterday after a UK 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
“It is a tragedy that the depositors have lost their money” Mr Justice Peter Smith
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 the downfall of Farepak, which hit thousands of people who used the business Christmas presents.
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 £5m would have probably saved the group, but the HBOS was not prepared to make it.”
He said Farepak bosses had done everything “as far as I can
to
save
for see, to save the group”, adding: “It is a tragedy that the depositors have lost their money.
“As I have shown, HBOS, in accordance with its contractual entitlement, collected in £10m for its benefit. When the companies went into insolvency, a distress fund was set up for the benefit of the depositors.
“HBOS made a £2m contribution to that payment. This is not a court of morality, but I would suggest that HBOS really ought to… seriously consider whether or not they ought to make a further substantial payment to the compensation fund.”
He
said
what
happened “while apparently legally acceptable” might not be regarded as “acceptable” by the public.
One of the former Farepak bosses, Sir Clive Thomson, warned yesterday that taxpayers may have to foot a legal bill of £20m following the abandonment of the court action.