The suspended finance chief of Patisserie Valerie's parent firm has been arrested by police overnight, just days after the discovery of potentially fraudulent accounting irregularities.
Patisserie Holdings said in a market announcement on Friday that Chris Marsh, who was suspended from his role earlier this week, has since been released on bail.
It comes just days after the cafe chain owner said it had discovered a major black hole in its accounts.
Yesterday, the chain announced it was on the brink of collapse unless it could ensure a rapid injection of capital.
The firm has a branch in Doncaster’s Frenchgate Center and an outlet in Barker’s Pool in Sheffield.
Patisserie Holdings said on Wednesday that it has been notified of "significant, and potentially fraudulent, accounting irregularities and therefore a potential material mis-statement of the company's accounts".
This significantly affected the company's cash position, with the firm saying it could lead to a "material change" in its overall financial position.
Mr Marsh was later suspended from his role and accountancy giant PwC drafted in to look through the company's books.
To compound its troubles, Patisserie Holdings has also received a winding-up petition for its principal trading unit Stonebeach, with a hearing now scheduled for October 31.
It relates to £1.14 million owed to HMRC.
The cake chain has now warned that it will cease trading without an "immediate" cash injection.
The firm could be forced to appoint administrators as early as Friday.
Emergency fundraising talks overseen by advisers to Patisserie Holdings were continuing on Thursday evening. Other options on the table include a loan or a rights issue.
Chairman Luke Johnson is said to be considering stepping in with funds that could help save the business.
Mr Johnson, a serial entrepreneur, is the largest shareholder in Patisserie Holdings with a 37% 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.