Yahoo Finance Patisserie Valerie is teetering on the brink of collapse
Bakery and cafe chain Patisserie Valerie (CAKE.L) said on Monday morning that it is “still in discussions with its bankers to extend the standstill of its bank facilities beyond 18 January.”
It added that it will issue an update when those discussions have concluded.
The chain is teetering on the brink of collapse as if it doesn’t come to an agreement with the company’s lenders, HSBC and Barclays, that means the banks could demand repayment of debts that may amount to nearly £10m ($12.8m). In turn, that could potentially force Patisserie Valerie to fall into administration and file for bankruptcy. The chain’s prominent entrepreneur owner Luke Johnson already gave the chain an emergency £10m bridging loan to help ensure its survival.
Patisserie Valerie first told the market it had discovered accounting irregularities in October. On 16 January, it said that the multimillion fraud on its books is far more significant than first thought, involving “thousands of false entries into the Company’s ledgers.”
It added that forensic accountants had discovered “the misstatement of its accounts was extensive, involving very significant manipulation of the balance sheet and profit and loss accounts.”
“It will take some time before a reliable trading outlook can be completed,” it said.
Shares in Patisserie Valerie were suspended in October last year, following the discovery, and have yet to restart trading. The group had previously been valued at £450m. In that same month, the company’s finance director, Chris Marsh, was arrested by Hertfordshire police and bailed. He has since resigned. The Serious Fraud Office has also opened a criminal investigation into an individual but has not specified who that individual is.
