Cake chain Patisserie Valerie has collapsed into administration, putting more than 3,000 jobs at risk.
The firm said discussions with its lenders HSBC and Barclays to extend a standstill agreement on its debts had failed, leaving it with no option but to appoint KPMG as administrator.
KPMG said it would continue to trade 121 out of 200 stores, but added that 70 cafes and concessions would close over the next few days, resulting in a “significant number” of redundancies.
More than 3,000 jobs are at risk (Nick Ansell/PA)Blair Nimmo, head of restructuring at KPMG and joint administrator, added: “Our intention is to continue trading across the profitable stores, as collectively the brands have a strong presence on the high street and have proven very popular with consumers.
“At the same time, we will be seeking a buyer for the business and are hopeful of a good level of interest.
“Unfortunately, however, we have had to take the difficult decision to close 70 stores resulting in a significant number of redundancies.
“We will be working with those affected employees, providing all support and assistance they need.”
The cake firm’s parent company Patisserie Holdings has been grappling with the fallout of an accounting fraud since October.
It said on Tuesday evening that the extent of fraud meant it was unable to renew its bank loans and did not have sufficient funding to continue trading.
Chairman Luke Johnson has extended an unsecured, interest-free loan to help ensure that the January wages are paid to all staff working in the ongoing business, the company added.
The loan will also assist the administrators in trading as many profitable stores as possible while a sale process is undertaken.
Last week, Patisserie revealed KPMG had been hired to carry out a review of all options following the accounting scandal which pushed it close to collapse last year.
It also unveiled the “devastating” extent of irregularities in its books, which included thousands of false entries into the company’s ledgers.
The discovery of a black hole in the company’s accounts in October last year pushed it into a crisis which saw it almost cease trading.
A rescue plan was passed by shareholders in November, resulting in the issue of £15 million worth of new shares.
Shadow business secretary Rebecca Long Bailey said: “News that Patisserie Valerie has collapsed into insolvency as a result of fraud will worry workers and their families.”
She added: “The option of employees being given the opportunity to buy out the company has never been on the cards.
“Labour is looking at possible changes to the law and the financing necessary to support employees considering the option of taking over companies when faced with similar situations.”