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Patisserie Valerie collapses into administration

Bakery chain Patisserie Valerie has collapsed into administration, putting up to 2,800 jobs at risk.

The company, which trades from around 200 cafes 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."

Patisserie Valerie said discussions with its lenders HSBC and Barclays to extend a standstill agreement came to nothing, leaving it with no option but to appoint KPMG as administrator.

The company said that Patisserie Valerie chairman Luke Johnson has extended an unsecured, interest-free loan to help ensure that January wages are paid to all staff working in the ongoing business.

Trading in shares of Patisserie Holdings were suspended in October when it indicated a black hole in its accounts from "potentially fraudulent" accounting irregularities.

The fallout led to its former finance director being arrested and released amid a Serious Fraud Office investigation.

Last week, the company said: "The work carried out by the company's forensic accountants since (October) has revealed that the misstatement of its accounts was extensive, involving very significant manipulation of the balance sheet and profit and loss accounts.

"Among other manipulations, this involved thousands of false entries into the company's ledgers.

"It will take some time before a reliable trading outlook can be completed while the above work streams progress.

"The initial indications from the work carried out to date is that the cashflow and profitability of the business has been overstated in the past and is materially below that announced in the trading update on 12 October 2018, which was based on limited work carried out over a 48-hour period."

That investigation last year resulted in estimated revenue and profits for the year to September being slashed to £120m and £12m respectively.

Grant Thornton, which had overseen Patisserie's books since 2006, is the subject of a Financial Reporting Council inquiry for its handling of the contract.

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