Patisserie Valerie administrators settle £200m lawsuit

Its administrator FRP Advisory - which liquidated the cafe chain - sued Grant Thornton in 2020 alleging it was negligent in the preparation of financial statements between 2014 and 2017. 

It was placed into administration in January 2019 after discovering potentially fraudulent accounting irregularities that led it to overstate its financial position by £94m. The failure wiped out millions of pounds of shareholders’ investments and sparked a string of legal and regulatory cases. 

According to the Financial Times, in identical statements, the companies said: “The [Patisserie Valerie Group] and Grant Thornton confirm that in 2021 they resolved the claim brought against Grant Thornton by PV Group. The terms are strictly confidential.” 

FRP pursued Grant Thornton for £200m, turning to law firm Mishcon de Reya to bring the claim. It said “large accounting misstatements” had resulted in Patisserie Valerie’s board “being unaware that the group has insufficient funds to continue to trade”, in a report to creditors last year. 

The settlement comes after Grant Thornton was fined more than £2.3m by the Financial Reporting Council (FRC) in September for “a serious lack of competence” in its audits of the cafe chain. 

Initially, the FRC imposed a fine of £4m on Grant Thornton, but this was adjusted due to aggravating and mitigating factors and discounted from admissions. In addition to this, the regulator gave the auditor a suite of non-financial sanctions including a review of its audit practice’s culture relating to the challenge, and additional monitoring in relation to the bank. 

It also imposed an £87,750 fine on David Newstead, who led Grant Thornton’s audit and banned him from carrying out statutory audits for three years. 

Alongside this, the Serious Fraud Office has opened a criminal investigation into Patisserie Valerie’s collapse and made several arrests - however, no charges have been announced.