Brighton cake shop closes after £40m fraud

A cake shop in Brighton was doomed by a £40 million fraud which is still being investigated by detectives.

The East Street branch of Patisserie Valerie was on a list of 71 outlets to close, administrators from KPMG said today (Wednesday 23 January).

The administrators hope to sell the remaining 122 branches, including one in Western Road, Hove, which are all still trading.

Those on the list of closures were described as loss-making branches.

The administrators were called in after two banks – Barclays and HSBC – refused to agree a standstill on money owed by the cake shop chain’s parent company Patisserie Holdings.

The company’s chairman Luke Johnson, who also owns the Palace Pier, in Brighton, personally pledged £3 million to ensure staff still working for the business were paid their January wages.

In all, 920 jobs have been lost with the closures announced today.

KPMG said that it would “continue to provide all necessary support and assistance to those employees who have lost their jobs, including providing them with the information needed to apply for monies owed from the Redundancy Payments Service”.

David Costley-Wood, a KPMG partner and joint administrator, said: “Since our appointment less than 24 hours ago we have been pleased with the level of interest we have received in the business and so remain hopeful of achieving a positive outcome.

“In the meantime we can reassure customers that, across the remaining 122 stores, it is all but business as usual.”

The £40 million fraud came to light in October although the size of the financial damage has grown since the issue first emerged.

The most recent estimate, last week, is believed to have dented the confidence of the company’s banks.

They called in their debts and refused to agree a standstill, forcing the business into administration.