Patisserie Valerie has fallen into administration after rescue talks with banks failed.
The troubled bakery chain had been in discussions to renew agreements, but was unable to reach a deal. The news comes three months after it uncovered “significant, and potentially fraudulent, accounting irregularities”.
In a statement posted to the London Stock Exchange this afternoon parent company Patisserie Holdings said: “Patisserie Holdings plc announces today that, as a direct result of the significant fraud referred to in previous announcements, it has been unable to renew its bank facilities, and therefore regrettably the business does not have sufficient funding to meet its liabilities as they fall due. As a consequence, the directors have appointed partners at KPMG as administrators to the company and its various subsidiaries.”
Chairman Luke Johnson has provided the company with an unsecured, interest-free loan of £3m to ensure that all January wages are paid to the bakery’s more than 3,000 staff.
Administrators KPMG have confirmed 70 of the brand’s 200 cafés and concessions will close immediately. The administrators will continue to trade 121 stores while assessing options for the business. The management team, under CEO Steve Francis will be retained.
Blair Nimmo, head of restructuring at KPMG and joint administrator, said: “Our intention is to continue trading across the profitable stores, as collectively, the brands have a strong presence on the high street and have proven very popular with consumers. At the same time, we will be seeking a buyer for the business and are hopeful of a good level of interest.
“Unfortunately, however, we have had to take the difficult decision to close 70 stores resulting in a significant number of redundancies. We will be working with those affected employees, providing all support and assistance they need.”
Last week Patisserie Holdings said that the misstatement of its accounts, first revealed in October 2018, was worse than originally believed and called in auditor KPMG to review all options.
It said the misstatement had been “extensive” and involved “very significant manipulation of the balance sheet and profit and loss account”.
The statement added that “thousands of false entries” had been uncovered in the company’s ledgers, describing the effects of the alleged fraud as “devastating”.
A previous rescue deal had been passed by shareholders in November and saw £15m of new shares issued and a £20m funding injection by Johnson.
The Financial Reporting Council had previously announced that it has launched an investigation into accountancy firm Grant Thornton under the Audit Enforcement Procedure into the company’s statements for the years ending 30 September 2015, 2016 and 2017.
A separate investigation has been launched into Patisserie Valerie’s former chief financial officer Chris Marsh’s preparation and approval of the documents.
The company’s subsidiaries include Druckers, Vienna Patisserie and Baker & Spice.