FRP replaces KPMG as Patisserie Valerie administrator
Following the emergence of conflicts of interest relating to Grant Thornton, the creditors of collapsed café chain Patisserie Valerie have dropped KPMG as administrators. Because Grant Thornton was also the Big Four firm’s auditor at the time of Patisserie Valerie’s downfall, KPMG was perceived as unable to action critical legal proceedings against the mid-tier audit firm.
Following the emergence of a £40 million black hole in its accounts three months before, café chain Patisserie Valerie collapsed into administration at the start of 2019. The company had struggled to return to stability, while scrambling to uncover the extent of its short-fall in cash flow, and brought KPMG on board to oversee the sale of its assets.
However, while KPMG took on the role, the firm went on to flag a conflict of interest to Patisserie Valerie’s creditors, which the group has finally acted upon. According to a report from KPMG joint administrators in March, Grant Thornton – who had been pilloried for failing to notice huge discrepancies in Patisserie Valerie’s accounts – are also auditors to KPMG. With the need for pursuing legal claims against the auditor becoming increasingly clear, KPMG suggested the appointment of another firm to oversee it.
The statement said, “It will be necessary for the Company to consider whether there may be sufficient grounds to establish potential legal claims against a number of parties. These parties may include Grant Thornton, who were the auditors to the Patisserie Valerie Group. Grant Thornton are also auditors to KPMG, and given that the Joint Administrators are partners in KPMG, it would not be appropriate for the Joint Administrators to consider whether the Company has a potential legal claim against Grant Thornton. We are therefore proposing the appointment of an additional administrator… to review all potential legal claims.”
Irish private equity firm Causeway Capital Partners part-rescued the company in February and acquired 96 stores. At the time all members of staff across the Patisserie Valerie and Philpotts chains were transferred to the purchaser with immediate effect. With that end of the administration tied up, Patisserie Valerie’s creditors have opted to replace KPMG, rather than hire another firm to work alongside it.
The creditors’ committee of PV Holdings Realisations served notice on the KPMG contract in July, while announcing it will move the Patisserie Holdings’ administration to business and restructuring firm FRP Advisory. The move will see KPMG joint administrators remain in post for a brief spell to complete several immediate actions required for the administration, before the final handover.
The committee stated, “The creditors committee of PV Holdings Realisations has voted to appoint Paul Allen and Geoff Rowley, partners at FRP Advisory, as liquidators of the company. The liquidators will now work with the administrators KPMG to ensure an orderly hand over before conducting their investigation.”
