Caven blog

Ex-Farepak directors face disqualification

Nine former directors of the failed Christmas hamper company Farepak are facing disqualification after the Insolvency Service started disqualification proceedings against them in the High Court last month.

Farepak and its parent company, European Home Retail, collapsed in October 2006 and were wound up. The Insolvency Service conducted an investigation into the collapse and concluded that the nine directors are unfit to run any other company and should be disqualified.

The power to disqualify directors is one of the Insolvency Services most severe disciplinary tools and is rarely used, especially for such high profile business personalities. The directors facing disqualification include Sir Clive Thomas, the former head of Rentokil Initial, and Neil Gillis, the outgoing chief executive of Blacks Leisure.

The other directors, including non-executive directors, are: William Rollason, Nicolas Gilodi-Johnson, Stevan Fowler, Michael Johns, Paul Munn, Joanne Ponting, and Stephen Hicks.

The fact that the Insolvency Service has initiated disqualification proceedings against the nine does not mean they will definitely be disqualified. The court must be convinced that they are not capable of running a company. The directors are reportedly preparing to contest the proceedings and are hiring legal representation.

If the court finds in favour of the Insolvency Service, the nine ex-Farepak directors may be banned from being involved in the running of any company for up to 15 years.

Farepak’s creditors are hoping the court proceedings will give them some answers as to what went so catastrophically wrong and caused the company to collapse.

More than 116,000 people, most of them low-income families, who had made monthly deposits with Farepak in order to afford Christmas lost an average of £317 each. The administrator’s report issued in October 2010 said it is unlikely that those 116,000 people will get back more than 15p for every £1 deposited with the failed company.

Related links:

For more on the story (Guardian)

Read about director disqualification (Caven)

Find local commercial solicitors in the UK (Caven)

One comment on “Ex-Farepak directors face disqualification

  1. Ironically, a lot of employers make unnecessary trouble for themselves in resignation cases by discussing things normally associated with discharges or terminations for cause. Thus, the problematic terms are basically the same in resignation cases as they are for termination cases, the main difference being that in resignation cases, not only can such terminology knock the case into the misconduct arena where the employer has the burden of proof, but it also tends to make a misconduct argument unwindable.

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