The administrators of Patisserie Valerie have reportedly settled a £200m lawsuit with Grant Thornton after allegations of negligence arose in its audits of the café chain, which collapsed after a suspected fraud.
The bakery group was put into administration in January 2019 after discovering “potentially fraudulent accounting irregularities” that led it to overstate its financial position by £94m.
The failure reportedly wiped out hundreds of millions of pounds of shareholders’ investments and sparked a string of legal and regulatory cases, cutting 900 jobs amid store closes, although some shops found buyers.
FRP pursued Grant Thornton for £200m, alleging it was negligent in the preparation and conduct of financial statements between 2014 and 2017, and it turned to law firm Mishcon de Reya to bring the claim.
Grant Thornton had audited Patisserie Valerie for 12 years but, according to the Financial Times, it failed to spot an alleged manipulation of its books.
The news outlet said that the parties resolved the claims last year in a confidential settlement that came to light on Sunday.
A spokesperson for Grant Thornton UK LLP told Catering Today: “The PV Group and Grant Thornton confirm that in 2021 they resolved the claims brought against Grant Thornton by PV Group. The terms are strictly confidential.”
The settlement comes after Grant Thornton was fined over £2.3m by the Financial Reporting Council (FRC) in September for “a serious lack of competence” in its audits of the café chain regarding accounts for the three financial years to 2017.
Additionally, David Newstead, who led Grant Thornton’s audit, was imposed a £87,750 fine and was banned from carrying out statutory audits for three years.
The Serious Fraud Office has also opened a criminal investigation into Patisserie Valerie’s collapse and made several arrests, including one rearrest. However, no charges have been announced.