Page 26 - Patisserie Valerie Teaching Note
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KPMG:  Administration



               Administration is used, as was the case with Patisserie

               Holdings plc, when it is considered that at least part of an

               insolvent business can be sold or salvaged. Administration is
               a formal insolvency process where the administrator acts in


               the best interests of the creditors, such as holders of
               floating charges (often a bank or banks) who can force the

               appointment of an administrator if the company has not

               upheld the conditions of any debenture agreement.

               Normally, a moratorium is placed on the company, meaning

               that the company’s creditors cannot start insolvency

               proceedings, or take legal action against the firm once the

               procedure has been implemented.


               When a firm is going into administration, the procedure and

               the company are managed by the administrator, whose goal

               is to restore the company to profitability if possible.




               On 22 January 2019, Patisserie Valerie announced that it had

               failed to secure an extension to its lending facilities and that
               it was to enter administration. Patisserie Valerie is the latest

               high-profile company to collapse because of fraud and

               inaccurate data. The case raises some of the same issues as

               the failure of Carillion, namely:


                     1. Quality of the audit work performed by the external

                         auditors.

                     2. Lack of strong internal controls.

                     3. Poor governance.
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