Cafe chain Patisserie Valerie could face legal action from shareholders over the £40m black hole in its accounts.
Lawyer Philip Rubens, from the firm Teacher Stern, is canvassing institutional shareholders and claims to be on the verge of securing third-party funding.
He is aiming to make a claim against the AIM-listed firm for losses endured by shareholders after it announced the discovery of “significant, and potentially fraudulent, accounting irregularities” earlier this month.
The company’s shares are currently frozen while it awaits the findings of investigative auditors from PricewaterhouseCoopers, who attempting to determine the source of a series of major accounting discrepancies.
Its suspended finance director, Chris Marsh, was arrested and released on bail without charges. The Serious Fraud Office (SFO) has said it is investigating.
Rubens, head of financial services litigation at Teacher Stern, said he had received interest from several institutional shareholders, and also expected to hear from retail investors who had taken shares in the company for tax avoidance purposes.
He said it was difficult to speculate on the outcome at this stage, but said he believed press reports showed that investors had been “misled”.
The revelation of financial discrepancies at the firm shows it is less profitable than previous reports had suggested.
Grant Thornton, Patisserie Valerie’s auditor, may face scrutiny over its assessment of the firm’s accounts in the run-up to revelations about its finances. A spokesperson for Grant Thornton said it was aware of issues, but could not comment further because of confidentiality.
The chain was saved from collapse two weeks ago after its chairman Luke Johnson, one of the UK’s best-known entrepreneurs, gave it a £20m cash lifeline as a loan to cover its outstanding liabilities, and shareholders agreed to undertake a heavily-discounted share sale.