Page 17 - Patisserie Valerie Teaching Note
P. 17

Q & A





               Q1  Why would Luke Johnson feel obligated to introduce
                       funds into Patisserie Holdings plc after the 10  October
                                                                                          th
                       2018?



               A1  In its most recent results statement in May, 2018
                       Patisserie Holdings said it had cash reserves of £28.8m.

                       The company collapsed after the accounting scandal

                       which left the firm without enough money to pay its

                       debts.


               Q2  How quickly did the cash black hole open up?


               A2  Cash black holes generally open up when the finance

                       department loses control of the process of reconciling

                       the cash in the bank to the accounts. If it built up

                       quickly, it means the business is haemorrhaging cash
                       and would make investors nervous of putting in any

                       more money. This was not the case with Patisserie

                       Valerie where the sheer volume of misstatements

                       would indicate a much longer period blood-letting.


               Q3  What was the finance director doing?


               A3  Chris Marsh had worked with Luke Johnson for well

                       over a decade. Current and former associates of his tell

                       me he is a "quiet guy", "not ostentatious - no gold
                       watch or fast car", "definitely Luke's man". He has been

                       suspended while forensic accountants try to figure

                       what happened here.
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