Patisserie Valerie plunged into crisis after £40m black hole in accounts, The Guardian reports.
About 70 of the cafe group’s nearly 200 stores and concessions will close immediately, with the loss of about 900 jobs.
Patisserie Holdings, the parent company that also owns the Druckers Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City brands, has been in crisis since October when a £40m black hole in its finances was blamed on “potentially fraudulent” accounting irregularities.
Blair Nimmo of KPMG, a joint administrator of the business, 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.”
Last week, the company admitted its finances were in even worse shape than it had previously thought. Patisserie Valerie said forensic accountants had found “thousands of false entries into the company’s ledgers”.
In a statement to the stock market on Tuesday, Patisserie Holdings said that as a “direct result of the significant fraud”, it had been unable to renew its bank facilities and “therefore regrettably, the business does not have sufficient funding to meet its liabilities”.
The company’s chairman, Luke Johnson, said he had personally extended a £3m interest-free loan to it to help ensure January wages are paid to all staff.
“This loan will also assist the administrators in trading as many profitable stores as possible while a sale process is undertaken,” a statement said.
The appointment of administrators wipes out the value of Johnson’s and all other shareholders’ investment in the stock market-listed business, which was valued at £450m before it flagged up the potential fraud.
The company’s finance director, Chris Marsh, was arrested by Hertfordshire police and bailed in October. He resigned that month.
After carving up Flybe, KPMG is trying to find a buyer for HMV while also preparing a CVA for Paperchase. And now it must try to salvage something from the catastrophic mess bakery Patisserie Valerie finds itself in.
The chain collapsed into administration on Tuesday.
What’s next for Patisserie Valerie?
Some 70 of its 191 stores will close immediately but the list has not yet been announced.