Patisserie Valerie escapes High Court winding up

Luxury cake chain Patisserie Valerie has survived a winding up petition in the High Court and launched a further probe into share option scheme for its top executives.

Paul May, left, chief executive of Patisserie Holdings - Patisserie Valerie's parent company, with chairman Luke Johnson

The crisis-hit Birmingham-based business had to be rescued by a £20 million loan injection by its biggest shareholder, company chairman Luke Johnson, and a £15 million emergency share sale after a massive black hole was uncovered in its accounts.

The company's finance director Chris Marsh has been arrested on suspicion of fraud and bailed by police.

Meanwhile parent company Patisserie Holding's shares are still suspended on the stock market.

Patisserie Valerie has managed to avoid being wound up in the High Court

Directors also discovered they faced a £1.14m claim from HMRC, which was taking the business to court to be liquidated. Today Patisserie Holdings said the winding up petition against Stonebeach – the company's principal trading subsidiary – had been dismissed by at the High Court.

At the same time it confirmed it was looking into its three-year long-term incentive plan for its executives, called an LTIP.

Patisserie Holdings said 666,666 shares granted to finance director Chris Marsh and one million granted to chief executive Paul May in 2016 “remain unvested and are now considered by the company as being unlikely to become exercisable under the rules of the LTIP."

It said two identical option grants in 2014 and 2015, exercised by Mr May and Mr Marsh in February and July this year "were not correctly accounted for in Patisserie’s financial filings".

In a statement to the City, Patisserie said: "The company, as part of the ongoing investigation, is seeking to understand why the grant of options relating to 2015 and 2016 have not been appropriately disclosed and accounted for in its financial statements."

Meanwhile Mr Johnson, the company's other directors and their advisors from PwC are continuing to investigate the company's finances to discover its true state of health, while the Serious Fraud Office is conducting its own inquiry.

As well as being less profitable than originally thought, Patisserie may be facing an accounting black hole valued at up to £40 million according to some reports.