Patisserie Valerie faces legal action

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.

Administrators KPMG are closing 70 stores, and are looking for buyers for the 121 cafes that remain open.

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 in October after accounting “irregularities” were announced. That included “secret overdrafts” unknown to Mr Johnson and the board.

Nevertheless, Mr Boxall said he was “staggered” and had questions about 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.

Shares in Patisserie Holdings were suspended in October following the announcement of accounting irregularities and finance director Chris Marsh was arrested and later released on bail without charge.

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

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

“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.

It is not yet clear which of the 70 stores are closing while up to 900 of the 3,000 staff may lose their jobs.

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.

Do you work for Patisserie Valerie? Have you been told that your job at risk as a result of your store being closed? Email haveyoursay@bbc.co.uk.

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