Administrators to make 900 redundancies today after ‘significant fraud’ at retailer

Patisserie Valerie

70 Patisserie Valerie stores will close today after administrators were appointed to the crisis-hit retailer last night.

Around 900 people will be made redundant, with another 2,000 other jobs under threat, in the wake of a “significant fraud” that threatens to end the company’s 93-year history.

The Birmingham-headquartered cafe chain has been fighting for its survival since October, when it first revealed accounting irregularities that cast serious doubt over its viability.

Last week the company said it had found “thousands of false entries” on the company’s ledgers, which was part of a “very significant manipulation of the balance sheet and profit and loss accounts”.

It has been unable to agree a deal with its lenders, Barclays and HSBC, to extend a standstill of its facilities which had been put in place in the immediate aftermath of the revelations and that expired last Friday.

KPMG has been appointed as administrators of the Patisserie Holdings and its subsidiaries. The group operates stores under several brands, including the historic Birmingham name Druckers Vienna Patisserie.

In a statement, the company 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.”

Chairman Luke Johnson, whose reputation as a business guru has taken a hammering since the company’s problems came to light, “has personally extended an unsecured, interest-free loan of £3.0m to help ensure that the January wages are paid to all staff working in the ongoing business”, the company said.

The locations of the stores which are to close immediately are expected to be confirmed later today.

Since then only Johnson remained in place among the senior management team. All of its other directors, along with its chief executive and finance director, have departed since the scandal came to light.

Investigations by the police and regulators are continuing as answers are sought as to what exactly happened and how auditors failed to spot the accounting irregularities.

The group had been valued at £450m when its shares were suspended in October, with the appointment of administrators making them worthless.

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