Business

Patisserie Valerie reveals stores to close

Patisserie Valerie cafe Image copyright Getty Images

Administrators of Patisserie Holdings have named the 71 outlets that will close following the firm's collapse.

KPMG said that 902 jobs will go due to the closure of 27 Patisserie Valerie stores, 19 Druckers and 25 Patisserie Valerie concessions.

However, KPMG said it is "business as usual" at the remaining 122 outlets.

The administrator said it was "pleased" with the level of interest it had received from potential buyers of the surviving parts of the business.

Patisserie Valerie was forced into administration on Tuesday after it failed to reach a rescue deal with its banks.

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Entrepreneur Luke Johnson, who bought the business in 2006, has committed more money to ensure staff are paid this month.

The first signs of trouble came back in October after accounting "irregularities" were announced. That included "secret overdrafts" unknown to Mr Johnson and the board.

Shares in Patisserie Holdings were suspended and finance director Chris Marsh was arrested and later released on bail without charge.

Mr Johnson, who owned 37% of Patisserie Holdings, kept the business going by extending it a loan, and money was raised from other shareholders.

But earlier this month the company said the accounting scandal was worse than it thought.

Employee reaction: 'I couldn't sleep last night'

A member of staff, who did not want to be identified, told the BBC that Patisserie Valerie's collapse had come as a complete shock to them.

"Apparently everything at work was fine since October.

"I was always asking the managers, 'are you going to close the shop?' and they said no, no, no," said the employee.

"I'm still in shock - I couldn't sleep last night."

Employees of stores that are closing were informed by phone on Tuesday evening, and asked to attend meetings on Wednesday where they will receive further information.

"Everyone was thinking that everything was fine," the employee added.

"Last Wednesday, they had a meeting with all the big managers and they were making plans to make the shops better. Everyone was quite positive last week."

Image caption Closure notices have already appeared in some outlets

Now the company that owns Patisserie Valerie could be facing legal action from investors over the collapse of the cafe chain.

Chris Boxall, co-founder of Fundamental Asset Management, said he was "flabbergasted" by the situation.

He told BBC Radio 4's Today Programme he was considering legal action as he had a "moral duty" to his clients.

Mr Boxall questioned Mr Johnson's oversight of the business.

"What has he and the board been doing? What questions were they asking at meetings, what things were they looking at, did they ever roll up their sleeves and have look at the heart of the business which you would expect from a so-called executive director which he was in this business," he said.

It is not clear if the target of any action might be the company or its former directors, including Mr Johnson.

"This business has gone from half a billion [pounds] valuation to nothing in a matter of months," Mr Boxall said.

'Good brand'

While he had questions for the former directors, he also said there were questions for the banks and the auditors.

"We're very, very angry," he said.

There are hopes the stores which continue trading might find a buyer.

Julie Palmer, regional managing partner at Begbies Traynor, is optimistic. She told BBC Radio 5's Wake Up To Money: "It is a good brand, it has got good High Street presence, it was making good profits over a long period of time.

However, she said potential buyers would be sceptical about the company's figures.

In addition to Patisserie Valerie, the company's other brands include Druckers Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City.

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