Patisserie Valerie CFO Chris Marsh has been arrested for fraud as the company faces collapse, following the discovery of significant accounting irregularities.

Patisserie holdings, the parent company of Patisserie Valerie, confirmed to the London Stock exchange that Chris Marsh, who is currently suspended from his position at the company, was arrested on 11 October and subsequently released on bail.

The UK café chain has found itself in hot water following the discovery on 9 October of an accounting shortfall between the reported financial status and the current financial status of the company, which is reported to be in the region of £20m ($26.4m).

In a statement to the London Stock Exchange, the company’s board described this as the effect of ‘significant, and potentially fraudulent, accounting irregularities’.

Patisserie Valerie’s board then became aware on 10 October of a £1.14m winding-up petition against its principal subsidiary Stonebeach from HMRC on 14 September.

The day after, the company’s directors made a further statement: “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.

“As a consequence, the Directors and the Company's professional advisers are assessing all options available to the business to keep it trading and will update the market in due course.”

It has been reported that PwC are lined up to act as the company’s administrator, however PwC would not confirm this at the time of publication.

The company’s auditor, Grant Thornton, declined to comment due to client confidentiality.

The Financial Reporting Council has said that it is looking into the matter and will ‘give full consideration to further action as more facts become available’.

Shares in Patisserie Holdings, which are traded on the AIM sub-market of the London stock exchange, have also been suspended.