News | World News | Patisserie Valerie finance chief is arrested as ‘£20million black hole’ is found in chain’s funds

Patisserie Valerie finance chief is arrested as ‘£20million black hole’ is found in chain’s funds

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Pictured: Patisserie Valerie finance boss, 44, arrested after '£20m black hole' is found - as chairman bids to save collapsing firm with £20m loans

  • Patisserie Holdings announced today that Chris Marsh was arrested last night
  • The finance chief was suspended from his role on Wednesday following the news
  • Business will need an 'immediate cash injection' to keep 200 stores open
  • The cake shop, which has 155 stores in the UK, suspended shares over scandal 
  • Today's market announcement confirmed that Mr Marsh is now on bail

By James Wood For Mailonline

Published: 04:10 EDT, 12 October 2018 | Updated: 12:21 EDT, 12 October 2018

Chris Marsh (pictured), the finance director of Patisserie Valerie, was arrested last night. He has since been released on bail. There was no answer when MailOnline called at his St Albans home today
Chris Marsh (pictured), the finance director of Patisserie Valerie, was arrested last night. He has since been released on bail. There was no answer when MailOnline called at his St Albans home today

Chris Marsh (pictured), the finance director of Patisserie Valerie, was arrested last night. He has since been released on bail. There was no answer when MailOnline called at his St Albans home today

This is the Patisserie Valerie finance boss who was arrested last night after a '£20million black hole' was found in the company's finances.

Chris Marsh, who was suspended from his role earlier this week, has since been released on bail following the arrest.

It comes as the chain's chairman bids to save the collapsing firm with a £20million loan.    

Luke Johnson, 56, the founder and chairman of the chain, is offering up the loans in an effort to keep the company afloat while it looks to raise £15 million by issuing new shares.

Patisserie Holdings made the announcement this afternoon just hours after it emerged the company had closed two of its cafes in London. 

Issuing the announcement, a spokesman for Patisserie Holdings said: 'The loan is for a three-year term and made on an interest-free/fee-free basis and will be secured in due course.'  

The proceeds from the share placement will be used to pay amounts owed to the likes of HM Revenue & Customs and trade creditors.

Patisserie Valerie (pictured in Soho) has suspended its shares following the discovery of a reported £20million black hole in its accounts
Patisserie Valerie (pictured in Soho) has suspended its shares following the discovery of a reported £20million black hole in its accounts

Patisserie Valerie (pictured in Soho) has suspended its shares following the discovery of a reported £20million black hole in its accounts

It has also been earmarked for 'general working capital purposes and committed capital expenditure,' Patisserie Holdings said.     

It comes as landlords for at least two Patisserie Valerie locations in London - in Hammersmith and Edgeware Road - cancelled their lease agreements with the company over breach of contract.

It is understood that the company has failed to pay rents.  

Hertfordshire Police confirmed this morning that an arrest had been made.

A spokesman said: 'A 44-year-old man from St Albans has been arrested on suspicion of fraud by false representation.

'He has been released under investigation.'

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

There was no answer when MailOnline called at Mr Marsh's St Albans home today.  

While his father, Mr Marsh snr, told MailOnline that he had nothing to say concerning his son. 

There was no answer when MailOnline called at the home of Chris Marsh in St Albans today
There was no answer when MailOnline called at the home of Chris Marsh in St Albans today

There was no answer when MailOnline called at the home of Chris Marsh in St Albans today

Asked if his son would be making a statement, he replied 'not at this stage.'

The Serious Fraud Office also confirmed that an investigation had been opened into an individual. 

A spokesman said: 'Following this morning's Regulatory News Service announcement by Patisserie Holdings PLC, the SFO confirms that its Director has opened a criminal investigation into an individual. 

'We can give no further information or comment at this time.'    

Prior to working at Patisserie Holdings, Marsh was finance director at both FishWorks PLC and Healthy Living Centres PLC. 

The former is a group of seafood restaurants which went into administration in the aftermath of the financial crisis while the latter was delisted in 2006. 

The cake shop and continental tea room, which has more than 200 stores in the UK, suspended Marsh on Wednesday amid the chaos with its books.

Patisserie Valerie (one of its cafes is pictured) was founded by entrepreneur Luke Johnson, who was a millionaire aged 30 after floating Pizza Express
Patisserie Valerie (one of its cafes is pictured) was founded by entrepreneur Luke Johnson, who was a millionaire aged 30 after floating Pizza Express

Patisserie Valerie (one of its cafes is pictured) was founded by entrepreneur Luke Johnson, who was a millionaire aged 30 after floating Pizza Express

Owners Patisserie Holdings revealed its financial crisis before the London Stock Exchange opened on Wednesday and that afternoon said it was handed a winding up petition from HMRC.

Yesterday, in an extraordinary statement to the London Stock Exchange owner Patisserie Holdings said it found a 'material shortfall' in its fund.

It said that without an 'immediate cash injection', it believed that there is 'no scope for the business to continue trading in current form'. 

To compound its troubles, Patisserie Holdings is also dealing with a winding-up petition for its principal trading unit Stonebeach, with a hearing now scheduled for October 31.  

How Patisserie Valerie's financial woes unfolded

September 9 

Luke Johnson, the founder of Patisserie Valerie, writes a column in the Sunday Times entitled 'A business beginner's guide to tried and tested swindles'.

October 10

Patisserie Holdings reveals its financial crisis before the Stock Exchange opened and was that afternoon reportedly handed a winding up petition from HMRC. 

The company's finance chief, Chris Marsh, was also suspended from his role.

October 11 

It announced it had found a 'material shortfall' in its fund. It said that without an 'immediate cash injection', it believed that there is 'no scope for the business to continue trading in current form'.  

October 12 

Patisserie Holdings announces in a market statement that Chris Marsh was arrested on Thursday night but has since been released on bail.

Landlords for at least two Patisserie Valerie locations in London - in Hammersmith and Edgeware Road - cancel their lease agreements with the company over breach of contract.

Luke Johnson, 56, the founder and chairman of the chain, offers up £20million in loans for the company in a bid to save it

Patisserie Valerie was founded by entrepreneur Luke Johnson, who was a millionaire aged 30 after floating Pizza Express - but up to £165million of his £260million fortune is believed to be tied up in his ailing cake shop. 

Earlier the business, set up by British entrepreneur Luke Johnson, said it had been notified of 'significant, and potentially fraudulent, accounting irregularities and therefore a potential material mis-statement of the company's accounts'.

As a result, this has significantly affected the company's cash position and may lead to a 'material change' in its overall financial position - and led to shares being suspended.

It 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.

Chairman Mr 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 was today confirmed to be stumping up £20 million in a bid to keep the company afloat.   

A stock market announcement by Patisserie Holdings this afternoon said: 'The company expects to enter into a new £10 million loan agreement with Luke Johnson later today, the company's executive chairman.

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

'Due to the nature of the settlement period of the placing, Luke Johnson will commit a further bridging loan facility of up to £10 million, to provide the company with the ability to fund immediate outstanding liabilities.

'The company will repay the amount of the bridging loan drawn down in full immediately upon receipt of the placing proceeds.'   

The company expects its key lenders to hold off from forcing the company to pay its debts for a period of 12 months by entering into 'standstill agreements'.

However, that could fall apart if the share placing fails or 'certain insolvency procedures are commenced against the group'.    

The serial entrepreneur is the largest shareholder in Patisserie Holdings with a 37 per cent stake.

If a buyer for the group does emerge, any purchase is likely be conducted via a pre-pack administration process, where a new owner is able to shed onerous liabilities.

PwC, which is working with the firm on its financial position, is the most likely to carry out the insolvency, but several other corporate undertakers are also thought to be waiting in the wings.

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

How Patisserie Valerie boss could lose up to £165m and wrote guide on how to spot fraud just a WEEK before '£20m black hole' was found in firm's funds

Patisserie Valerie founder and chairman  Luke Johnson revealed the potential fraud today
Patisserie Valerie founder and chairman  Luke Johnson revealed the potential fraud today

Patisserie Valerie founder and chairman  Luke Johnson revealed the potential fraud today

Luke Johnson is considered one of Britain's most successful entrepreneurs and has built up a £260million fortune in food and drink.

But with Patisserie Valerie on the verge of collapse, the £165million stake he has in the company is in real jeopardy.

Married father-of-three Mr Johnson was a millionaire aged 30 after helping float Pizza Express and then later selling it off.

The chain, which is on almost every high street, had just 12 restaurants in 1993 when he took it on and within six years it had 250.

Shares in that period went from 40p to £9 each. 

He said that Patisserie Valerie was his 'sweetest success', and until recently its accounts appeared to reflect that.

But yesterday he revealed that there was understood to be a £20million black hole in its accounts and suspended its shares.

Patisserie Valerie's potentially fraudulent accounting scandal is embarrassing for the chairman and majority shareholder, who claimed only last May the firm had a 'strong balance sheet'.

And just a month ago he wrote 'a business beginner's guide to tried and tested swindles' in his £100,000-a-year Sunday Times column.

In a series of bullet points advising on avoiding fraud he warned: 'Even clever investors sometimes fall for the most ambitious fraudsters'.

In his July column on cryptocurrencies, he called them 'fraudster's paradise' and wrote: 'If there is business, there will be frauds. I was reminded of this recently, when a senior manager at one of our companies admitted to falsifying invoices. He stole the money to cover his losses trading cryptocurrencies. This was a minor affair; the stuff that hits the news is much grander and more dramatic.'

There was no answer at Mr Johnson's £4million West London home yesterday as the financial  crisis gripping his company became worse
There was no answer at Mr Johnson's £4million West London home yesterday as the financial  crisis gripping his company became worse

There was no answer at Mr Johnson's £4million West London home yesterday as the financial  crisis gripping his company became worse

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