15th Oct 2018 07:34
LONDON (Alliance News) - Troubled cafe chain Patisserie Valerie reportedly had secret overdrafts totalling GBP10 million.
Credit facilities were set up by owner Patisserie Holdings PLC with Barclays and HSBC, and GBP9.7 million had been used by the time they were discovered last week, Chairman Luke Johnson told The Sunday Times .
The company's future was thrown into question earlier this week after it uncovered fraudulent activity around its financial accounts and was served a wind-up order by the taxman over GBP1.14 million owed to HM Revenue & Customs.
Johnson described the discovery as a "bombshell" and said he had "no inkling this was going to happen".
"I've never had an experience like this in my career and I hope never to repeat it. It's certainly been the most harrowing week of my life," he told the newspaper.
He pledged up to GBP20 million in new loans on Friday to rescue the company from collapse and saved around 2,800 jobs.
Johnson said he felt as though he was "in a nightmare that I'd wake up from" but that he felt a "moral obligation" to preserve the company.
He added: "We have, I would argue, preserved a lot of jobs and a good business.
"When companies go into administration, there's massive value destruction. Preserving a company, keeping it whole, matters."
Another GBP15 million was raised through the issue of new shares.
Directors said that initial investigation showed that historical statements on the cash position of the company were misstated and subject to fraudulent activity and accounting irregularities.
The group's finance director, Chris Marsh, who was suspended from his role earlier this week, has since been arrested on suspicion of fraud, but was later released.
The Serious Fraud Office has opened a criminal investigation.
Patisserie Holdings, which owns additional brands such as Druckers, Philpotts and Baker & Spice, trades from more than 200 stores and also has a partnership with Sainsbury's, with branded counters present in the supermarket.
By Rachael Burnett, Press Association
source: Press Association
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