Patisserie Valerie said earlier on Friday that its suspended finance director Chris Marsh had been arrested and released on bail.
'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'.
"We can give no further information or comment at this time".
After discovering potentially fraudulent accounting practices, Patisserie Holdings admitted that it has impacted the company's cash position and overall finances.
Patisserie Holdings, the chain's parent company, chairman Luke Johnson is offering up to £20 million in loans in an effort to keep the company afloat, while it looks to raise £15 million by issuing new shares.
Patisserie Valerie traces its roots back to 1926 when Belgian-born Madame Valerie opened a shop in London's Soho district.
It said that while the findings were preliminary and subject to change it now believed the group had net debt of approximately £9.8m.
Adding to the company's headache this week was an announcement that the board had just learned of a winding-up petition that had been filed against its main subsidiary by the taxman.
This comes after Patisserie Holdings, which also owns other brands including Philpotts, Baker & Spice and Flour Power City, warned that it would not be able to continue trading without an immediate injection of capital.
Stores are still trading, although a branch in Hammersmith was shut today after a landlord terminated its lease due to non-payment of rent.
"We are going to cease new openings for a period and focus on making the most of what we have, we are going to stabilise our relations with suppliers, landlords, etc., we're going to beef up our systems and controls", Mr Johnson said in an interview with PA.
The woes of Patisserie Holdings, which only past year the tycoon had described as "just about my most successful venture", are threatening to wipe out the majority of his £165 million stake in the business and to call into question his ability to do deals - the raison d'être of private equity.
The cafe chain's financial position started to unravel two days ago when accounting irregularities emerged and Britain's tax office said it was owed 1.14 million pounds.
Marsh, who joined the company in 2006, was an integral part of the company's growth.