Patisserie Holdings Plc Share News (CAKE)

(Sharecast News) - Collapsed café group Patisserie Holdings could face potential legal action from disgruntled investors, it emerged on Wednesday.Overnight, the Patisserie Valerie owner said talks with its banks had failed and that it had been forced to call in the administrators.Chris Boxall, co-founder of Fundamental Asset Management, an investor in the owner of the Patisserie Valerie chain, confirmed he was considering legal action as a "moral duty" to his clients. He added he was "flabbergasted" by the latest developments.He told the BBC: "What has [chairman Luke Johnson] and the board been doing? What questions were they asking at meetings, what things were they looking at, did they ever roll up their sleeves and have a look at the heart of the business, which you would expect from a so-called executive director, which he was in this business."Patisserie Valerie's woes started in October, when significant accounting irregularities first emerged. Finance director Chris March was then arrested before being released on bail without charge.Johnson, who is the biggest shareholder with a 37% stake, lent the Aim-listed business cash to keep it afloat before overseeing a £15m rescue package via deeply discounted rights issue.However, it appeared the accounting scandal was worse than initially thought, and the company said on Tuesday that "as a direct result of significant fraud" it had been unable to renew its bank facilities, meaning it no longer had sufficient funds to keep the business going and had called in administrators.Trade union Unite blamed government inaction and called for urgent reform of the regulatory system for the financial sector.Unite assistant general secretary Gail Cartmail said: "Workers at Patisserie Valerie are the innocent victims of bandit capitalism, they have been failed by the government which has failed to take action to end these practices."This latest corporate collapse demonstrates why the financial regulators are not fit for purpose, they need to be able to take action before a company collapses, rather than after jobs are lost. Since Carillion's collapse the government has continued as though it is business as normal and has ignored all suggestions to initiate vitally needed reforms."Financial analysts were also dismayed. Laith Khalaf, senior analyst at Hargreaves Lansdown, said it was "shocking that a fraud of this scale can take place within a listed company, albeit the company was on the lighter-regulated AIM market."Any dim hope investors had of recovering any value from shares they bought in good faith has now been extinguished," he said.Administrators KMPG are closing 70 stores and looking for buyers of the remaining 21 cafes.Clive Black, analyst at Shore Capital, said: "Quite what happens from here remains to be seen. No doubt a lot of potentially interested parties will be running the slide rule over what is left of Patisserie Valerie, if the administrators can outline in confidence what is the reality of the financial and legal situation."Patisserie Valerie is not a collapse about high street footfall, channel shift, the thrifty shopper or the British shopper falling out of love with fresh cream. It is, to quote its own administration statement, deemed to be the result of significant fraud. Therefore, against a backdrop of challenging trading conditions, this particular sad tale is quite distinctive."