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Pastry Valerie entered the administration, putting at risk nearly 3,000 jobs after failing to obtain a financial lifeline from its banks.
The cake and coffee sector has been in crisis since October, when a financial deficit of £ 40 million was attributed to 'potentially fraudulent' accounting irregularities.
Last week, the company, which operates 200 coffees, admitted that its finances were even more degraded than previously thought. Forensic accountants have discovered "thousands of false entries in the company's records".
In a statement to the stock exchange, he said that "directly because of the significant fraud", he had not been able to renew its banking facilities and that "therefore, the company does have unfortunately no funds to meet its commitments ".
President Luke Johnson said Tuesday he personally gave an interest free loan to the company to ensure January salaries are paid to all staff.
"This loan will also help administrators negotiate as many profitable stores as possible during the sales process," the statement said.
The appointment of directors removes the value of the investment of Johnson and all other shareholders in the business, valued at £ 450 million just before it is reported to potential fraud in October.
The company's chief financial officer, Chris Marsh, was arrested by the Hertfordshire police and released on bail in October. He resigned the same month.
The 93-year-old Valerie bakery chain was administered after a turbulent period in recent months.
October 10
The owner of the Valerie pastry shop revealed a black hole accounting for several million pounds and said that his main trading subsidiary – the chain of stores – was about to be liquidated by HMRC. The listing of Aim shares, which valued the company at £ 450m, was suspended following the shock announcement.
October 12
Luke Johnson, president of the multi-billion dollar Valerie Bakery, said he would inject £ 20m of his own money into the chain to keep it going despite accusations of "fraudulent activity." Johnson, who made himself known by quickly developing the Pizza Express chain, then described the scandal as a "nightmare" after the board of directors had declared that it was not up to current millions of pounds of bank loans.
October 26
Chief Financial Officer Chris Marsh resigned after his arrest by Hertfordshire police. The Serious Fraud Office confirmed that he had opened an investigation into an unknown person.
November 15
General Manager Paul May has been replaced by Stephen Francis, a Turnaround Specialist. Johnson remained in his role as chairman despite shareholder criticism, but agreed to give up his salary of £ 60,000.
January 16th
The Valerie pastry shop reported having discovered "thousands of false entries in the company's records", generating profits "significantly lower" than the figures disclosed when the black hole was discovered. Forensic accountants said they discovered "a very important manipulation" of the books in the chain. The company remained stranded Monday in discussions with lenders about an extension of banking facilities.
January 22
Patisserie Holdings enters the administration.
The Serious Fraud Office has confirmed the opening of a criminal investigation into an individual, but has not provided any additional information.
The Financial Reporting Council said it was also investigating Marsh and the accounting firm Grant Thornton for his role as Valerie pastry auditor.
The crisis has forced Luke Johnson, the president of the multibillion dollar business, to allocate £ 20 million for emergency refinancing to keep the company afloat. Johnson was reimbursed £ 10m after the other shareholders agreed to inject £ 15m of new funds.
It is understood that the £ 10 million loan from Johnson was not secured by the badets of Patisserie Valerie. He will therefore have to join other creditors, including suppliers and his major lenders, HSBC and Barclays, whose loans were also unsecured, while waiting to see if directors can raise money from a sale for repay them.
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The group's banking activities, which prevented it from recovering its debts, ended on Friday as investors nervously awaited the outcome of the negotiations.
Cavendish Cavendish Asset Management's Cavendish Paul Mumford, who injected an additional £ 100,000 into the Valerie pastry as part of a £ 15m bailout fundraising operation in November, said the administration was "a big disappointment".
"I think there might have been a different solution," he said. He suggested that the shareholders who participated in the £ 15 million fundraiser would be "a little angry" for having done so on the information that the company would realize profits of £ 12 million, figure that pastry Valerie subsequently declared much farther high.
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