Patisserie Valerie appoints KPMG administrators after collapse

25 January 2019 3 min. read
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Following the emergence of a £20 million black hole in its accounts three months before, café chain Patisserie Valerie has collapsed into administration. The company struggled to return to stability, while scrambling to uncover the extent of its short-fall in cash flow, and has now brought KPMG on board to oversee the sale of its assets, jeopardising some 3,000 jobs across Britain.

In a statement to the London Stock Exchange in early January 2019, Patisserie Holdings announced that a fraudulent misstatement of its accounts – initially uncovered in October 2018 – involved thousands of false entries into the company's ledgers, and was far worse than initially feared. It also explained that the cash flow and profitability of the business had been overstated in the past, and was “materially below that announced in the trading update on 12 October 2018, which was based on limited work carried out over a 48-hour period."

As the situation seemingly continued to rapidly deteriorate, the Birmingham headquartered company brought in Big Four firm KPMG to explore “all options”, including falling into insolvency. Initially, however, KPMG was drafted in to advise the group on what routes it could take “to recover from the devastating effects of the fraud, and to preserve value for its stakeholders going forward.” Having apparently exhausted that avenue, the announcement has finally come that Patisserie Valerie has collapsed into administration, with KPMG already in place to oversee proceedings.

Patisserie Valerie appoints KPMG administrators after collapse

Parent company Patisserie Holdings said, "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."

The bakery chain told the press that discussions with its lenders HSBC and Barclays to extend a standstill agreement had failed to produce the required result. As a result, Patisserie Holdings was left with no option but to appoint KPMG as administrator, putting as many as 3,000 jobs at risk across the UK.

To that end, KPMG has already confirmed that while it will continue to trade from 121 out of 200 stores, 70 of the chain’s cafes and concessions are to be closed over the coming week, resulting in a "significant number" of redundancies. Meanwhile, Chair Luke Johnson has extended a £3 million interest-free loan to ensure January wages are paid to all staff in the on-going business.

Blair Nimmo, Head of Restructuring at KPMG and a joint administrator of Patisserie Holdings, 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."