The upmarket baked goods chain, which had warned on Thursday its current business was at risk of collapse without an immediate
injection of cash, said Chris Marsh was held last night before being released on bail.
Hertfordshire Police later said: "A 44-year old man from St Albans has been arrested on suspicion of fraud by false representation.
"He has been released under investigation."
Patisserie Holdings suspended trading in its shares on Wednesday after the board said it was looking into "potentially fraudulent accounting irregularities" resulting in a misstatement of its financial position.
Mr Marsh was suspended from his role while the circumstances of the financial black hole were examined internally.
A story by Sky News on Tuesday suggested the sum could exceed £20m.
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.
It related to more than £1.1m said to be owed to HMRC.
Patisserie Holdings has more than 200 stores - the vast majority of them under the Patisserie Valerie brand.
More from Business
Car groups hit out over government cuts to grants for electric and hybrid vehicles
Ashley eyes 'Harrods of the North' in £95m deal for Frasers
Fragile sentiment as global market sell-off eases
Q&A: The global stock market sell-off explained
300 jobs at risk as fashion chain Coast collapses
Chancellor under pressure to increase funding for universal credit
It employs more than 2,500 people.
A further statement was expected from the company later on Friday to update investors on the hunt for new capital to shore up its finances.