Grant Thornton has settled a £200m lawsuit with Patisserie Valerie’s bankruptcy administrators over its role in the café chain’s collapse.
The London headquartered accountancy giant has reached agreement to settle its case with Patisserie Valerie’s administrators out of court, according to the Sunday Telegraph who broke the news.
In a statement sent to City A.M., a spokesperson for Grant Thornton confirmed it had “resolved the claims brought against Grant Thornton” by Patisserie Valerie, as they said the terms of the deal “are strictly confidential”.
The payout comes after the café chain collapsed into administration in 2019, after trading of shares in the firm was suspended the previous year on discovery of potentially fraudulent activity.
Patisserie Valerie’s administrators later hired Mishcon de Reya to filed a £200m lawsuit against Grant Thornton over claims it was negligent in its audit of the café chain.
Sources speaking to Sunday Telegraph said Grant Thornton’s settlement payout is set to account for the majority of the accounting firm’s £28m annual claims provision.
The settlement comes after the UK’s audit watchdog fined Grant Thornton £2.34m for its audit of Patisserie Valerie, as it said the accounting firm had shown a “serious lack of competence in conducting the audit work.”
The UK’s Financial Reporting Council (FRC) said Grant Thornton “missed red flags” around evidence of potential fraud inside the café chain, as it also fined Grant Thornton audit engagement partner David Newstead £87,750.
The UK’s Serious Fraud Office (SFO) has subsequently made a number of arrests in relation to the potential fraud, after opening an investigation into the company.