Grant Thornton is being sued for £200m by the liquidators of Patisserie Valerie after the cake shop chain collapsed following suspected fraud.
Liquidators FRP Advisory said Grant Thornton was negligent in the preparation and conduct of 2014 to 2017 financial statements.
As a result the liquidator is suing the mid-tier audit firm for damages of £200m. FRP cited “accounting failures” as the reason Patisserie Valerie was unaware it had insufficient funds to continue to trade.
The administration of the cake shop chain is ongoing.
In a statement Grant Thornton said it would fight “rigorously” to defend the claim: “Patisserie Valerie is a case that involves sustained and collusive fraud, including widespread deception of the auditors. The claim ignores the board’s and management’s own failings.
“As the matter is subject to an ongoing FRC investigation and civil claim, we are unable to comment further.”
FRP Advisory declined to comment, but pointed to a November statement, which said: “We can confirm that the joint liquidators of companies within the Patisserie Valerie Group have issued a claim for damages against Grant Thornton in respect of their negligent audits of the group companies’ financial statements for the financial periods 30 September 2014 to September 2017 inclusive.”
Patisserie Valerie collapsed into administration in January 2019 following the shock revelation of “significant fraud” at the company and the discovery of a £40m hole in its finances.
However, KPMG, which was originally appointed as liquidator, later announced that the missing money actually totalled £94m.
Accounting watchdog the Financial Reporting Council (FRC) said: “The FRC’s investigation into the audit of Patisserie Holdings is at an advanced stage and Grant Thornton are continuing to cooperate fully with us. We are not able to provide any further information at this point.”