The collapse of cake shop chain Patisserie Valerie on Tuesday marked a sharp end to speculation regarding its future after the surprise revelation of fraudulent activity in October left it on the brink for months.
The announcement followed a failed attempt from the firm to extend its bank facilities with HSBC and Barclays, meaning it could no longer meet its liabilities.
READ: Patisserie Holdings in crunch talks with banks over debt extension
KPMG - now administrators of the chain - is planning to shutter around 70 of the company’s cafes and concessions while trying to find a buyer for the rest of the group's 200 stores.
While this may be good news for some punters still craving a vanilla slice, the collapse of the chain has put up to 3,000 jobs at risk.
Who wants a piece?
Now that the administrators have been called in, there is speculation swirling over who, if anyone, could be sniffing around for a slice of the business.
Given recent events, a name whispered in hushed tones amongst the commentariat is once again Sports Direct International PLC (LON:SPD) boss Mike Ashley, whose recent spate of snapping up struggling high street chains such as House of Fraser and, potentially, HMV could have now landed Patisserie Valerie’s parent, Patisserie Holdings, in the crosshairs.
In a note to clients, a potential Ashley bid for Patisserie was mooted (albeit lightly), by analysts at broker Shore Capital, however, there was an important caveat.
“It is perhaps worthwhile pointing out that Patisserie Valerie is not a collapse about high street footfall, channel shift, the thrifty shopper or the British falling out of love of fresh cream. Patisserie Valerie is, to quote its own administration statement, deemed to be the result of 'significant fraud'”.
READ: Patisserie Valerie owner loses deputy chairman after discovering accounting black hole
Laith Khalaf, senior analyst at Hargreaves Lansdown, is also sceptical on the possibility of another Ashley swoop.
“It would be a new departure for him into a different kind of retail” Khalaf told Proactive, although the analyst does not entirely rule out the possibility as Ashley’s recent acquisition has not been “hugely well explained to the markets”.
Instead, Khalaf thinks the most likely outcome will be a carve-up of Patisserie’s assets and estate portfolio, either by local firms, multiple other chains, or a mix of both.
However, as the UK high street is currently “creaking” as he puts it, a buyer with enough resources to take on more assets would be difficult to find, although he adds that consolidation to stay afloat in the current market may be a potent driver for some.
As the true scale of the financial black hole is still yet to be established by the administrators at KPMG, it’s unlikely that any potential buyer will be willing to take on not only an, as yet, unquantified debt load but one that was bad enough to scupper the outfit in the first place.