Banks’ block formation of committee to help Patisserie creditors

Patisserie Valerie

Barclays and HSBC have blocked the creation of a committee of creditors to Stonebeach Ltd, the business that operated Patisserie Valerie, angering other creditors owed millions of pounds by the collapsed cake shop chain.

The banks vetoed the proposal at a meeting of creditors on April 18 without giving a reason, according to sources. It is understood that the banks had the controlling vote because they own a large chunk of the debt, about £7 million. HSBC and Barclays declined to comment.

Their decision means that companies that were owed money when the Patisserie Valerie group collapsed in February could recoup less of their lost funds.

Businesses including Brakes, the catering supplier, Land Securities, the retail landlord, and Canaccord Genuity, Patisserie’s broker, are owed more than £5 million by the company, according to an administrators’ report. KPMG, which is in charge of winding down the Patisserie Valerie group, estimated there would be a £4 million deficiency in money returned to creditors.

The parent company of Patisserie Valerie revealed in October that it had discovered “significant and potentially fraudulent irregularities”, leading to an investigation by the Serious Fraud Office. The chain collapsed three months later.

A committee of creditors could have appointed a second administrator to Stonebeach to explore legal action against Grant Thornton, Patisserie’s auditor. A successful lawsuit would have resulted in more money being shared among the creditors.

Without a committee, a legal challenge is unlikely to go ahead as KPMG said it would “not be appropriate” for it to consider bringing a legal claim against Grant Thornton as it is audited by the firm.