Patisserie Valerie collapses into administration as rescue talks fail

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Troubled cafe chain Patisserie Valerie has collapsed into administration after the failure of rescue talks with banks.

The company, which has about 200 outlets, said on Tuesday it did not have enough money to meet its debts.

Administrators from KPMG have been appointed to run the chain and its various subsidiaries, which employ about 2,500 people.

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 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.

In addition to Patisserie Valerie, the company’s other brands include Druckers, Vienna Patisserie, and Baker & Spice.

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.

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.

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.