Patisserie Valerie faces closure as financial crisis deepens

The bakery chain uncovered 'significant, and potentially fraudulent, accounting irregularities' earlier this week

The cake maker is urgently seeking a cash injection (Reuters)

Cafe chain Patisserie Valerie has revealed it could be forced to stop trading unless it can find an “immediate injection of capital”, after reporting a multi-million pound hole in its accounts on Wednesday.

The company said that on Tuesday, the board had been notified of “significant, and potentially fraudulent, accounting irregularities and therefore a potential material mis-statement of the company's accounts”.

“This has significantly impacted the company's cash position and may lead to a material change in its overall financial position,” the firm said in a statement to the London Stock Exchange.

“As a result the company has requested that its shares be suspended from trading on AIM while it conducts a full investigation with its legal and professional advisers into its true financial position.”

Chris Marsh, the group’s chief financial officer, has been suspended from his role.

The group also revealed that HMRC had filed a winding up petition in respect of the group’s main trading subsidiary, Stonebeach, over an unpaid tax bill of £1.14m.

The black hole in its finances could cost the company more than £20m, which would potentially wipe out profits for the entire year.

On Thursday, Patisserie Valerie issued an update to the market and said: “The board has now reached the conclusion that there is a material shortfall between the reported financial status and the current financial status of the business.

“Without an immediate injection of capital, the directors are of the view that that is no scope for the business to continue trading in its current form. As a consequence, the directors and the company's professional advisers are assessing all options available to the business to keep it trading and will update the market in due course.”

Patisserie Valerie currently employs around 2,500 people across the UK.