There will be no sweet victory for Patisserie Valerie or its shareholders as the high-street dessert chain has fallen into administration.
In October 2018, it was reported that large irregularities had been uncovered in the company’s accounts, drawing attention to an alleged fraud resulting in a deficit of £40m. Issues run deeper as thousands of false ledger entries appear to have been made; and consequentially the Serious Fraud Office is now investigating who is thought to be one of the individuals involved in Patisserie Valerie’s financial operations.
In recent months, urgent efforts have been made to secure funding as the chain’s numerous creditors agreed to not take action to recover their debts for a certain period of time. Discussions with the banks have failed and they have refused to continue providing facilities due to the company’s financial position. KPMG are now appointed as administrators as the company is unable to pay its debts.
Shareholders have expressed their concern at the lack of information provided by the company. They have described their current position as being in the dark as to the value and limited knowledge of the future of their investments.
It is not entirely clear where fault lies due to the lack of information provided by Patisserie Valerie. In order to discover this, KPMG are reported to have appointed solicitors to investigate potentially bringing legal action on behalf of the shareholders for the likely loss of their investments. This could see an investigation and claims being brought against Chairman Luke Johnson for potential fraud and misconduct within the company.
This showcases that directors cannot always hide behind the protection of their company’s limited status, as they may still find themselves with some personal liability for their actions. Directors therefore must comply with their statutory duties, if not the consequences can be significant.
The Swinburne Maddison Dispute Resolution team regularly act on behalf of investors and creditors who may require guidance in the event of company insolvency. Our team of specialist lawyers are also able to offer their expertise to directors who may be subject to proceedings, where a company has fallen into a state of insolvency. For more information please do not hesitate to contact the team on 0191 384 2441.