A cake shop chain with two branches in Brighton and Hove has entered into administration after its banks – Barclays and HSBC – pulled the plug.
Patisserie Valerie, which has branches in Western Road, Hove, and East Street, Brighton, has been teetering on the financial brink since a multimillion-pound fraud came to light in the autumn.
The company’s future looked assured after entrepreneur Luke Johnson arranged an emergency bail-out in October.
Mr Johnson, who owns the Palace Pier, lent £20 million to Patisserie Valerie. He serves as the cake shop chain’s chairman.
But last week the company said that the devastating fraud was worse than previously thought.
Patisserie Valerie has about 200 cafés and 2,800 staff – and the administrators, from KPMG, are expected to try to sell as many profitable branches as possible.
After talks with the banks failed to buy the business more time to put its finances straight, Mr Johnson personally pledged to make sure that the staff were still paid their wages for January.
In a stock exchange announcement, 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.
“As a consequence, the directors have appointed partners at KPMG as administrators to the company and its various subsidiaries.
“The 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.”
The Labour MP for Hove, Peter Kyle, said: “It will be a real shame if we lose another loved brand from our community.”
Mr Kyle, a member of the House of Commons Business, Energy and Industrial Strategy Committee, said: “It’s even more frustrating that its loss isn’t to do with quality or demand but mismanagement and corruption.
“We expect better from our retailers and the audit industry that should expose this kind of corporate malpractice and be fighting for lessons to be learned.”
His committee has been in contact with Patisserie Valerie since the fraud came to light.
