Auditor Grant Thornton Faces £200 Million Lawsuit
The auditing firm promises to contest the lawsuit as the fall out of the Patisserie Valerie scandal continues.
LONDON (Within the Law) - Liquidators overseeing the winding down of Patisserie Valerie say they will sue the auditor Grant Thornton for what it describes as ‘negligence’ in its role overseeing the statements of the company.
The firm FRP Advisory which is managing the process said it hoped to secure damages of around £200 million from Grant Thornton in a lawsuit revealed by the Financial Times.
“GT were negligent in the preparation and conduct of the 2014 to 2017 financial statements,” the letter read.
“As a result, the liquidators have issued proceedings on behalf of the members of the group, including the company, against GT for damages of c. £200m.”
Two years ago, Patisserie Valerie collapsed after discovering a major accounting fraud.
Thousands of false entries had been inputted into its ledgers at the time. Investigators at the Serious Fraud Office are still probing the case. Their finance director Chris Marsh was arrested in 2018 on suspicion of fraud, even as the firm scrambled to put together a rescue package. However, it slipped into administration in January 2019 after talks with lenders failed and it was unable to renew its bank loans.
In June 2019, five more people were arrested in connection with the fraud.
The case prompted Labour to suggest changes which could support employees who wanted to take over companies in such a situation.
Grant Thornton says it plans to “rigorously defend” the claim from the liquidators.
“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,” it said.
FRP has not commented on the lawsuit. “The details surrounding the claim are commercially and legally sensitive, and it is therefore not appropriate to provide extensive further detail in this regard at this juncture. Further details will be provided as appropriate as the matter progresses.”
(Written by Tom Cropper, edited by Klaudia Fior)