BDO earns £2.3m to date for Farepak

BDO has racked up £2.3m for its work as administrator and now liquidator of collapsed Christmas savings company Farepak since it was appointed in October 2006, but has written off £100,000 of its fees, the firm said.

The mid-tier firm has spent £1.16m building up court actions against a number of unnamed ‘third parties’ by BDO’s forensics team, which it said ‘has been crucial in allowing us to progress court action against third parties in an attempt to secure further monies for the benefit of all creditors’.

Farepak collapsed when its parent company European Home Retail went into administration in October 2006 leaving 119,297 claims in its wake. Customers and creditors have been told to expect a dividend payment of 5p for every £1 owed.

BDO said in a statement: ‘All our fees and actions taken have been approved by the Creditors’ Liquidation Committee. We discuss our fees with them on a regular basis and work with them to establish and agree fees which are acceptable to both parties.

‘Our work on the administration was discounted by 10% and our work on the liquidation over the last two years has been discounted by 6.9%. In addition to this, we have written off £100,000 of fees generated by time spent assisting the Farepak Response Fund and minister for trade, investment and foreign affairs.’

Last week, the Office of Fair Trading announced it is to investigate corporate insolvencies, looking at features in the market which could result in harm, such as higher fees or lower recovery rates for certain groups of creditors.