The cakes and pastries chain, which has been in crisis since October, has called in administrators from KPMG after failing to renew its banking facilities.
The administrators will continue to trade 121 stores while they assess options for the business, including exploring the possibility of a sale as a going concern. The administrators have retained the management team under chief executive Steve Francis to assist with the process.
Some stores will however close immediately, KPMG said: “A total of 70 stores and concessions will close, which will regrettably result in a significant number of redundancies. The joint administrators will provide further details regarding those outlets which will be affected by closure in the next 24 hours.” A total of 3,000 staff are employed in the business.
The group operated stores and concessions across the UK under five brands: Patisserie Valerie, Druckers Vienna Patisserie, Philpotts, the five-outlet Baker & Spice and London organic bakery brand Flour Power City.
A £40m black hole in the group’s finances was revealed in October, triggering a Serious Fraud Office investigation. In a statement to the stock market yesterday Patisserie Holdings said that as a consequence of the fraud, it did not have the cash to fulfil its liabilities. Chairman Luke Johnson has covered January’s payroll.
Blair Nimmo and David Costley-Wood from KPMG have been appointed as joint administrators to Patisserie Holdings, while Costley-Wood and Will Wright have been appointed joint administrators to subsidiaries Patisserie Acquisition, Stonebeach, Philpotts and Flour Power City.
Nimmo, head of restructuring at KPMG, said: “Our intention is to continue trading across the profitable stores, as collectively, the brands have a strong presence on the high street and have proven very popular with consumers. At the same time, we will be seeking a buyer for the business and are hopeful of a good level of interest.
“Unfortunately, however, we have had to take the difficult decision to close 70 stores resulting in a significant number of redundancies. We will be working with those affected employees, providing all support and assistance they need.”
Patisserie Valerie locations in the region include Warrington, Lancaster, Carlisle, Bury, Manchester, Preston, the Trafford Centre, Southport, Cheshire Oaks and Liverpool, where there is also a concession in Debenham’s. Druckers, which originated and remained prominent in the West Midlands, has an outlet in Manchester Arndale.
Philpotts has long been something of a breakfast and lunchtime institution in the North West, with four Manchester locations, two in Liverpool and one each in Knutsford and Chester, where the business started in 1985. The company was sold to Patisserie Valerie in 2014 with 21 locations, as the larger group sought to bring in an established presence in lunchtime markets.