Another top director has resigned from Patisserie Holdings PLC (LON:CAKE) in the wake of discovering a £40m gap in its accounts.
Deputy chairman Lee Ginsberg has stepped down from the owner of the Patisserie Valerie cake chain with immediate effect in order to “focus on his other commitments”.
READ: Patisserie Valerie owner appoints interim CFO after suspended CFO quits amid accounting scandal
The news comes a day after the company said forensic accountants have uncovered “thousands of false entries into the company’s ledgers”.
The accountants found “the misstatement of its accounts was extensive, involving very significant manipulation of the balance sheet and profit and loss accounts”.
Patisserie said it was clear the cash flow and profitability of the business had been overstated in the past.
The accounting black hole first emerged in October, forcing chairman Luke Johnson to inject £20mln of his own funds into the firm to keep it afloat.
CFO and CEO resignations
Chief financial officer Chris March was arrested in October on suspicion of fraud by false representation and released on bail. He resigned from the role shortly after being suspended by the firm.
The company has appointed Nick Perrin, the former finance director of UK veterinary services firm CVS Group PLC (LON:CVSG), as interim chief financial officer while it searches for Marsh’s replacement.
Chief executive Paul May resigned in November and was succeeded by Stephen Francis, who was chief executive of pork farmer Tulip Ltd.
Investigations into accounting scandal
The Serious Fraud Office has said it is investigating an individual involved in the matter but has not named the person in question.
The Financial Reporting Council (FRC) is investigating the audits carried out by accountancy firm, Grant Thornton, for 2015, 2016, and 2017, as well as the preparation and approval of company financial statements by Marsh.
The accountancy regulator said that once the investigation process, which could take up to two years, was complete, it would decide whether to present a case against Grant Thornton and Marsh at a tribunal, which could result in fines or, in the case of individuals, banning them from practising as accountants.
Patisserie has hired accountants KPMG, which is known for its expertise in restructuring and insolvency, particularly a company voluntary arrangement process that involves agreeing a deal with landlords and lenders to close stores and reduce rents.
Shares are currently suspended.