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Danny McCance 25 Jan 2019 04:40pm

Concerns over Patisserie Valerie administrator choice

Investors have voiced concerns over a “cosy” relationship between troubled café chain Patisserie Valerie and it’s newly appointed administrator KPMG

The concerns stem from the Big Four firm also being an auditor on Bread Holdings – the parent company to bakery chains Gail’s and Maison du Pain – of which Patisserie Holdings executive chairman Luke Johnson is a director.

“Shareholders are certainly concerned,” said Christopher Boxall, co-founder of Fundamental Asset Management, which invests in Patisserie Valerie.

“Everybody is apoplectic. Really, they are apoplectic already but this, another cosy number going down, really isn’t helping,” he explained.

KPMG was appointed to lead the administration of the chain when it went into administration earlier this week after talks with banks failed.

Patisserie Holdings, the parent company of the chain, said in a stock market statement that it had been unable to renew its bank facilities and secure funding as a “direct result of the significant fraud”.

Last week, the firm was brought in to advise Patisserie Valerie on its options in the wake of the discovery of “accounting irregularities” that involved “very significant manipulation” of the balance sheet and profit and loss accounts.

“You have to put this all into context, this business is mired in controversy and the greatest controversy surrounds the very cosy relationships.

“In those circumstances KPMG also acts as auditors to Mr Johnson’s other large investment, Bread Holdings,” he said.

“If they wanted to appoint a large firm, there were two other large firms out there where there was less direct conflict,” Boxall said.

“It’s just staggering given the sensitivity why this wasn’t thought about,” he added.

In 2017, Bread Holdings appointed the firm to advise on a range of options in regards to the sale of Gail’s.

KPMG is refuting allegations of a conflict, insisting Bread Holdings and Patisserie Valerie are two separate entities, and no relationship exists between the two.

Boxall believes that Johnson should have relinquished his role back in October.

“He’s had privileged access, as a large shareholder, to other information that other shareholders have not.

“On reflection, he should have stepped aside as soon as possible and let the new team take a fresh look at things.

“To have been immersed in it, and to have been in a privileged position for years is wrong,” Boxall said.

The firm will set a deadline for the first round of bids in the next few days.

Johnson has been contacted for comment. KPMG declined to provide an official response.

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