A CAKE shop chain with three sites in York has collapsed into administration.

The move by Patisserie Valerie - which has branches in Feasegate, Coppergate and at the Designer Outlet - came following failed discussions with HSBC and Barclays to extend a standstill agreement on its debts, and has put more than 3,000 jobs at risk.

KPMG was appointed as administrator on Tuesday, and said it would continue to trade 121 out of 200 stores, but added that 70 cafes and concessions would close in coming days, resulting in a "significant number" of redundancies.

Blair Nimmo, head of restructuring at KPMG and joint administrator, said: "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 dealing with the fallout of an accounting fraud since October, when the discovery of a black hole in the company's accounts pushed it into a crisis which saw it almost cease trading, before a rescue plan was passed by shareholders in November, resulting in the issue of £15 million worth of new shares.

The company 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.

An unsecured, interest-free loan has been extended to help ensure that the January wages are paid to all staff working in the ongoing business, the company said.

The loan will also assist administrators in trading as many profitable stores as possible while a sale process is carried out.

It is not yet clear which branches of Patisserie Valerie will be affected by the closures.