Patisserie Holdings Plc has announced that, as a direct result of significant fraud found in its accounts, the business has gone into administration.
The company, known for its cakes and cafés, reports it has been unable to renew its bank facilities, and therefore the business does not have sufficient funding to meet its liabilities as they fall due.
As a consequence, the directors have appointed partners at KPMG as administrators to the company and its various subsidiaries.
It was previously announced in November that Patisserie Valerie had appointed Stephen Francis, former boss of pork producer Tulip Ltd, as CEO after Paul May resigned amid an investigation into claims of “fraudulent activity”.
However the company announced on 16th January that the work carried out by the company’s forensic accountants since then had revealed that the misstatement of its accounts was extensive, involving very significant manipulation of the balance sheet and profit and loss accounts.
Chairman Luke Johnson has personally extended an unsecured, interest-free loan of £3 million to help ensure that the January wages are paid to all staff working in the ongoing business.
This loan will also assist the administrators in trading as many profitable stores as possible while a sale process is undertaken.
Chris Boxall, co-founder of Fundamental Asset Management, has commented on the news, saying he is “flabbergasted” by the situation.
He told BBC Radio 4’s Today programme he was considering legal action as he had a “moral duty” to his clients.
Following the company’s administration and with mutual agreement of the board, Canaccord Genuity Limited has also resigned as nominated adviser and broker to the company with immediate effect.
Patisserie Valerie reports it has no current intention of appointing a replacement nominated adviser.