GBK. Another high street CVA

Another failure in the “casual dining” sector is hardly news now and perhaps this one wasnt unexpected. GBK were just about the first of the premium burger chains on the market and very good they were too. Maybe still are but its a while since I frequented a branch and there are a huge range of competitors who might have taken a further step forward with the excellent Honest Burgers being a prime example

I havent looked at their accounts yet and do not anticipate that there will be a Patisserie Valerie £20m black hole but there is one slightly worrying item that links these two stories

Grant Thornton are the administrators for GBK. The same Grant Thornton who’s “audits” failed to spot two loans to Pattiserie Valerie for £10m each

(Incidentally I had a decent conversation with a genuinely nice and interesting auditor from a medium sized firm last week. He defended Grant Thornton on the basis that “we all make mistakes”. I did gently point out that its not exactly difficult to check the registered charges at companies house against any business. He took my point)

Pattiserie Valerie.Baffling auditors and banks

It is almost beyond belief that Grant Thornton (not a big four firm as I erroneously stated prviously, but number 6) signed off accounts with a loans totalling £20m not stated but how on earth were the banks blind to the fact that the loans were not subsequently reflected in the accounts? These were hardly insignificant amounts

Charges are registered and security has to be granted in some form. Was whoever the second lender out of Barclays or HSBC totally unaware of the first?

And why on earth were these loand required when the accounts were looking so robust and healthy? Didnt it cross anyones mind to question that?

This is going to run and run

Arrests at Pattiserie Valerie

But what on earth has happened here? 

A quick look at the PLC trading accounts demonstrate a very healthy trading position with profits rising year on year. A very decent balance sheet too without any of the usual items that create suspicion. This is bizarre

Maybe when I have a moment I will look closer but have a peek at these accounts and try and work out why such a healthy growing business has found itself in such difficulties.

They are freely available at companies house

This is going to run and run and surely this encompases some serious fraudulent activity

Pattiserie Valerie collapse?

 

Yet another high street struggler but the difference this time is that there could be a fraudulent aspect. In fact it has been reported that there is a “£20m hole in the accounts” which by anyones standards is pretty shocking. This story is going to run and run of course and the underlying issue of a business overexpanding will certainly come to the fore.

It will be a pity if the chain disappears and I for one can remember when they were just a couple of branches in Soho but aside from what would appear to be chronic mismanagement  there is the perennial question of who was auditing?

In this ugly case it was Grant Thornton (makes a change from PWC) and of course we do not know if there has been any genuine malpractice or incompetence. Yet.

But if there has been and its been mishandled yet again one of the “professional” big four then surely fines are not enough.

If they are complicit then quite simply their audit licence should be permenantly withdrawn. Simple as that

Another problem lender

I am privy to a verified story of an even more horrific piece of behaviour by a lender than those I previously mentioned. Unfortunately, because this is at a sensitive juncture, I am not even going to hint at the details but when discussing this matter with the lender aiming to resuce this client from the clutches of the rogue lender (a big name in fact) one thing did strike me.

My contact showed real anger towards the existing lender because of the situation they were putting the business owners in. They are apparently a nice couple seeking to work towards imminent retirement so its particularly resonant. What I liked about my contacts reaction was that he saw clearly the moral side and left me in no doubt that he would never ever wanted to be associated with such behaviour. I know this to be genuine because hes a contact i actually know quite well and like

To him it was personal but what about the industrys’s image?

I have to say that too often I have discussed examples of disgusting practice with representives from other lenders and been met with platitudes or a shrug of the shoulders.

Most professions despise and seek to drive out those that let the name of their profession down. And rightly so but has banking really sunk so low that it doesnt care?