Patisserie Share Discussion Threads

[dmipne] 29/1/2019 11:22

Far be it from me to defend the banks, but I can’t see how they have a responsibility here.

The theory really should be very simple. Directors prepare accounts and people read and use these as a basis for financial decisions. These include investors, funders and banks and suppliers. They can be likened to say a sales brochure you might read before buying a car.

In order that the Directors cannot put what ever they like in the accounts, they are by law required to have an independent audit to confirm that they show a true and fair view.

People are therefore entitled to make reasonable financial decisions on the basis of what they read. Using the car analogy here, people have been told it does 60mpg when the truth is 10mpg, and they had a one year warranty. They should be entitled to their money back in full. Who pays ? The people responsible for misleading them, ie the directors and auditors.

The further consequences of this should be jail for directors involved in deliberate financial fraud, a directors disqualification for those not considered to have deliberately committed fraud but whose actions have proven them incompetent and unfit to run a company and total financial ruin for the auditors. They should be required to recompense every person who has lost money as a result of being misled. Grant Thornton would effectively go bust as I doubt their insurers would cover all this.

Only tough action such as this will help prevent such events happening in other companies.

[sikhthetech] 29/1/2019 10:28

I have seen and been to PV cafes. They are (or were) at some major train stations, shopping centres and some Debenhams stores and some Sainsbury stores had their cakes for sale. They were also available on 'days out' gift companies...


They are also promoted as an outlet offering free coffee to Barclays and HSBC premier customers..

I previously mentioned how the 'free coffee' is still entered at the till as a sale and I do wonder if it was being registered as a proper sale, ie cash sale and not a freebie.


Is it a coincidence that the banks offering the free coffee to their premier customers are also the banks with the 'secret' overdrafts? Maybe these large cheques that subsequently bounced were stated as being from these banks for supplying coffee to their premier customers??

Hopefully, more details will emerge soon..

[bonio10000] 29/1/2019 09:02

I wouldn't worry - not as if coffee shops are in short supply.

The next recession would have sorted out most of them anyway.

[lefrene] 29/1/2019 08:58

I too find it inconceivable that someone heading up such a simple business would not have known that something was badly awry, especially so when HMRC are knocking on the door for the past couple of years!

[jotoha2] 29/1/2019 08:36

Rubbish , he was the Chairman and set the tone of the company , he needs to be pinned down and locked up!!

[sandy133] 29/1/2019 08:28

I still think that LJ had no idea, this was down to very misplaced trust in people that he had worked with for 20 years.
I do suspect that many of the suppliers that are connected parties will struggle to survive.

[lefrene] 29/1/2019 08:23

I speculate as to whether there was an end game? Was the idea to big the business up in order to sell it on to some other enterprise? Hoping to keep all the plates spinning for long enough to get a deal done before the thing imploded.

Yes there does seem to be a number of LJ businesses in the supply chain, so how dependent were/are those businesses on the PV orders? There must be quite a few who by now rather wish they had never met LJ.

[diku] 29/1/2019 08:23

If you leave too much trust and faith in others..that suggest nobody is doing the checking!!...

[rcturner2] 29/1/2019 08:13

Also don't forget that a lot of the money pumped in went to creditors which includes lots of companies owned by LJ, it is a proper mesh of companies where he owns some of the suppliers. So I think he may well have been protecting his own supplier companies at the expense of the parent.

[masurenguy] 29/1/2019 07:49

So why was LJ asleep at the wheel when even the sales and margin stats were waving big red flags?

Patisserie Valerie sales were sliding for three years, leaked report reveals

Patisserie Valerie sales were in secret decline for at least three years before the discovery of the accounting black hole that triggered its collapse, The Daily Telegraph can reveal. Documents containing the stricken cafe chain’s finances show revenues from "un-loved" established stores were falling even as the management team under executive chairman Luke Johnson pursued an "ambitious roll-out plan". Marketing material rushed together by administrators KPMG reveals like-for-like revenue has been on an accelerating downward slide since 2015, including a 4pc drop in the past two years.

[dudishes] 29/1/2019 02:36

I think the term "Fix the market" quoted earlier, sort of takes the biscuit/cake!

[lefrene] 29/1/2019 02:26

I had noticed a couple of outlets in Gloucester and Cheltenham, but they both looked as if they were struggling, I presumed they were franchisee's who had bought into a model that wasn't working too well, I hadn't realised that it was a chain owned by a listed company.

This scenario has been repeated a number of times on the AiM market, no doubt it will happen again. But Pat Val should have been spotted earlier, it was so out of line with the margins and profits of other similar businesses that those in the industry must have known something didn't fit.

So were they crooks, or were they just incompetent? Who is going to carry the can?

[danny baker] 29/1/2019 00:35

I wonder if the reason this fraud perpetuated so long was CAKE's low profile with the investment community. I had never heard of PatVal before the problems emerged. I wasn't aware that it was an AIM company and had never seen one of its cafes. I had visited both Cambridge and Peterborough Services regularly but McDonalds there is in the prime position, drawing attention away from the other outlets. I think PatVal had a narrow base of followers who either loved the concept or had faith in LJ. Other experienced investors just didn't notice it or if they glanced at the multiple just thought it was expensively valued. It's easy to suspend reality when everyone is a believer. With hindsight, PatVal was a bubble assisted by fictitious accounts just when you thought regulation was there to protect investors.

[sikhthetech] 28/1/2019 23:29

Patisserie Valerie sales were sliding for three years, leaked report reveals

[diku] 28/1/2019 22:49

The system is set up one way...their way is the right way!...

[lefrene] 28/1/2019 22:38

Thank you for that list Johnwise, it comes as no surprise at all that the Gloucester outlet is being closed. It is quite amazing that this enterprise was able to keep fooling investors for such a long time, but then if they trusted the accounts it's easy to see how they can be misled. I do hope Grant Thornton get taken to the cleaners, but I doubt that they will. It'll be a case of, "Well we ticked all the boxes, so it can't be our fault!"

The managers of many of these outlets will have known for a long time that their outlet was losing money, it would be interesting to talk to one or two of them of their experiences with PV.

[johnwise] 28/1/2019 19:08

Patisserie Valerie should never have opened in Middlesbrough the town is a first class dump, high unemployment area, the natives would not have appreciated the Valerie experience..


Patisserie Valerie news: ALL store closures revealed here - which are closing?

Patisserie Valerie store closure list here.

[chinahere] 28/1/2019 15:13

I assume Luke Johnson's loan and the bank overdrafts are senior to the equity raised funds, so it must be doubtful that anything will be left.

[edmondj] 28/1/2019 13:58

He put in £20 million and got £10 million straight back.

[montyhedge] 28/1/2019 13:33

Did LJ get his 10m loan back, when they stumped up the cash?

[masurenguy] 28/1/2019 13:31

They take their place in the queue behind the preferential creditors which means that they probably will have to write most, if not all, of it off !

[steptoes yard] 28/1/2019 13:28

What happens to the funds that the institutions stumped up after CAKE was suspended?

[poacher45] 28/1/2019 12:53

As the saying goes you can take £500 from the church funds and get sent to jail. Steal 50 million and you get away with it. The city is getting more and more corrupt and nobody will do anything about it.