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Patisserie Valerie collapses into administration as rescue talks fail | Patisserie Valerie collapses into administration as rescue talks fail |
(35 minutes later) | |
Troubled cafe chain Patisserie Valerie has collapsed into administration after the failure of rescue talks with banks. | Troubled cafe chain Patisserie Valerie has collapsed into administration after the failure of rescue talks with banks. |
The company, which has almost 200 outlets and employs 3,000 people, said it did not have enough money to meet its debts. | |
Administrators from KPMG said 70 stores will close immediately, meaning a "significant number of redundancies". | |
In October, Patisserie Valerie uncovered "significant, and potentially fraudulent, accounting irregularities". | In October, Patisserie Valerie uncovered "significant, and potentially fraudulent, accounting irregularities". |
The company's biggest shareholder and chairman, Luke Johnson, had been in talks to extend a cash lifeline from HSBC and Barclays. | The company's biggest shareholder and chairman, Luke Johnson, had been in talks to extend a cash lifeline from HSBC and Barclays. |
Patisserie Valerie's statement said that Mr Johnson had personally extended an unsecured, interest-free loan to help ensure that the January wages are paid to all staff working in the business. | |
"This loan will also assist the administrators in trading as many profitable stores as possible while a sale process is undertaken," the statement added. | "This loan will also assist the administrators in trading as many profitable stores as possible while a sale process is undertaken," the statement added. |
In addition to Patisserie Valerie, the company's other brands include Druckers Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City. | |
Finance director Chris Marsh was arrested after having been suspended by the company when the financial irregularities were uncovered. | Finance director Chris Marsh was arrested after having been suspended by the company when the financial irregularities were uncovered. |
Also under investigation, by the Financial Reporting Council, are former Patisserie Valerie auditors Grant Thornton. | Also under investigation, by the Financial Reporting Council, are former Patisserie Valerie auditors Grant Thornton. |
KPMG's administrators Blair Nimmo and David Costley-Wood said about 121 stores would continue to trade while a buyer is sought. | |
They 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." | |
The number of job losses is expected to be in the hundreds, but further details are not available because staff have not yet been told. | |
Last week, Patisserie Valerie confirmed it had found "extensive" misstatement of its accounts and "very significant manipulation of the balance sheet and profit and loss accounts". | Last week, Patisserie Valerie confirmed it had found "extensive" misstatement of its accounts and "very significant manipulation of the balance sheet and profit and loss accounts". |
This includes thousands of false entries in its ledgers, the company said in a statement. Profits and cash flow had been overstated and were "materially below" figures announced in October. | This includes thousands of false entries in its ledgers, the company said in a statement. Profits and cash flow had been overstated and were "materially below" figures announced in October. |
Patisserie Valerie almost ceased trading last year after the discovery of the black hole in the accounts. However, a rescue plan was passed by shareholders in November, resulting in the issue of £15m worth of new shares. | Patisserie Valerie almost ceased trading last year after the discovery of the black hole in the accounts. However, a rescue plan was passed by shareholders in November, resulting in the issue of £15m worth of new shares. |
The firm had been in talks with HSBC and Barclays to extend a standstill agreement on its debts, which came to nothing. | The firm had been in talks with HSBC and Barclays to extend a standstill agreement on its debts, which came to nothing. |