Suspended Patisserie Valerie company finance director Chris Marsh has been arrested and released on bail, the company announced this morning, as the Serious Fraud Office (SFO) opened a criminal investigation into potential fraud at the company.
Marsh was suspended on Wednesday after the high street cake shop revealed it had been notified of "significant and potentially fraudulent" accounting irregularities.
He was arrested by police last night, the company said.
A spokesperson for Hertfordshire Police said: "A 44-year-old man from St Albans has been arrested on suspicion of fraud by false representation. He has been released under investigation.
"We are not in a position to confirm names at this time."
Meanwhile, a criminal investigation is being led by the SFO.
"Following this morning’s regulatory news service announcement by Patisserie Holdings PLC, the SFO confirms that its director has opened a criminal investigation into an individual," an SFO spokesperson said.
Accounting watchdog the Financial Reporting Council (FRC) is mulling taking action over the statements.
An FRC spokesperson said: "We are looking into this matter carefully and will give full consideration to further action as more facts become available."
In a trading update yesterday afternoon Patisserie Valerie said: "The board has now reached the conclusion that there is a material shortfall between the reported financial status and the current financial status of the business.
"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."
The board said it had become aware of a winding up notice issued against its principal trading subsidiary Stonebeach relating to £1.14m of unpaid tax.