Cake chain Patisserie Valerie is facing a fight for survival after receiving a winding up petition over unpaid taxes and unearthing potentially fraudulent accounting irregularities.
In a stock market update issued on Wednesday afternoon, parent firm Patisserie Holdings said it has received a winding up petition for its principal trading unit Stonebeach.
It relates to £1.14 million owed to HMRC and was filed at the High Court of Justice, Companies Court.
The winding up hearing is scheduled for October 31 and Patisserie Holdings said it is in communication with HMRC as it scrambles to “understand better the financial position of the group”.
We are all deeply concerned about this news and the potential impact on the businessPatisserie Holdings chairman Luke Johnson
It caps a dramatic day for the firm, which earlier saw its shares suspended following the discovery of an accounting black hole.
Patisserie Holdings said it has been notified of “significant, and potentially fraudulent, accounting irregularities and therefore a potential material mis-statement of the company’s accounts”.
This has significantly affected the company’s cash position and may lead to a “material change” in its overall financial position.
Patisserie asked that its shares be suspended from trading on the London Stock Exchange’s junior AIM market while it carries out a full investigation into its true financial position.
In addition, finance chief Chris Marsh has been suspended from his role and accountancy giant PwC has been drafted in to look through the company’s books.
Chairman Luke Johnson said: “We are all deeply concerned about this news and the potential impact on the business. We are determined to understand the full details of what has happened and will communicate these to investors and stakeholders as soon as possible.”
Mr Johnson, a serial entrepreneur, is Patisserie Holdings’ largest shareholder with a 37% stake.
In May, the firm reported a 14.2% rise in pre-tax profit for the six months ended March 31, up from £9.7 million to £11.1 million.
Revenue climbed 9.1% to £60.5 million, it said at the time.
Patisserie Valerie trades from more than 200 stores and also has a partnership with Sainsbury’s, with branded counters present in the supermarket.