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Patisserie Valerie to shut down without 'immediate' cash injection following discovery of financial 'black hole'

Patisserie Valerie said it needed an urgent injection of capital. Photo: PA Archive/PA Images

Cake chain Patisserie Valerie is set to cease trading "immediately" unless it receives a cash injection.

The news comes following the discovery of a major black hole in its finances.

Parent company Patisserie Holdings made the admission on Thursday after being slapped with a winding up petition over unpaid taxes and unearthing potentially fraudulent accounting irregularities a day earlier.

Patisserie Holdings said: "The company, in conjunction with its professional advisers, has during the last 24 hours, undertaken further investigation into the financial status of the company.

The company added: "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."

The future of the firm appears to be at immediate risk. Credit: PA

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

In May, the firm reported a 14.2% rise in pre-tax profit for the six months ending March 31, up from £9.7 million to £11.1 million.

Revenue climbed 9.1% to £60.5 million, the company said at the time.

The company's future was originally thrown into question on Wednesday, when shares were suspended following the discovery of a major black hole in its accounts.

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 significantly affected the company’s cash position, with the firm saying it could lead to a "material change" in its overall financial position.

Finance chief Chris Marsh has since been suspended from his role and accountancy giant PwC drafted in to look through the company’s books.

Later on Wednesday, Patisserie Holdings said it had received a winding-up petition for its principal trading unit Stonebeach, with a hearing now scheduled for October 31.

Patisserie Holdings said it would update the market in due course.