Patisserie Valerie finance chief arrested as company teeters on brink of collapse

The owner of Patisserie Valerie has said the chain needs “an immediate injection of capital” to continue trading

The owner of Patisserie Valerie has said the chain needs “an immediate injection of capital” to continue tradingALAMY

Yesterday a spokesman for the firm said: "The company has been made aware that Chris Marsh, who is now suspended from his role as company finance director, was arrested by the police last night and has been released on bail".

The probe is being led by the Serious Fraud Office (SFO).

It says that it would have to enter administration without an immediate £20m cash injection.

Patisserie Holdings said on Friday that Johnson had stumped up loans, giving it the breathing space to raise £15.7 million in a heavily discounted placing announced later in the day. Before the suspension, Patisserie Holdings had a market value of 446 million pounds ($590 million).

"We can give no further information or comment at this time", the SFO said without naming the individual.

Patisserie Holdings suspended trading in its shares on Wednesday after the board said it was looking into "potentially fraudulent accounting irregularities" resulting in a misstatement of its financial position.

It also emerged that HMRC has filed a winding-up petition against Stonebeach Limited, the company's principal trading subsidiary, over a £1.14m tax bill.

"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", it stated.

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"The loan is for a three-year term and made on an interest-free/fee-free basis and will be secured in due course".

Historical statements on the cash position of the company were misstated and subject to fraudulent activity and accounting irregularities, directors said.

Mr Johnson said: "We are all deeply concerned about this news and the potential impact on the business".

Patisserie Valerie trades from more than 200 stores and also has a partnership with Sainsbury's, with branded counters present in the supermarket.

The woes of Patisserie Holdings, which only previous year the tycoon had described as "just about my most successful venture", are threatening to wipe out the majority of his £165 million stake in the business and to call into question his ability to do deals - the raison d'être of private equity.

The company's website reveals Chris Marsh joined the group as finance director in July 2006.

Last May he said that Patisserie Valerie had "a strong balance sheet" so the problems will come as a major disappointment to him.

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