Conviviality chief executive Diana Hunter has fallen on her sword after a calamitous week that saw the group plunged into financial chaos.

The group’s shares reached a high of 426p in November 2017 and they were down to just 101p when they were frozen last week following a string of financial mishaps.

Several investors sitting on a strong paper profit are now facing up to painful losses and Hunter is the first casualty as the group rallies to shore up its finances.

An industry source likened it to the days leading up to the collapse of Thresher owner First Quench in 2009.

The group said in a statement: “Diana Hunter, chief executive officer of the Company, is stepping down from the board of the company with immediate effect. Ms Hunter will remain with the company for a period of time in order to provide transition support.

“David Adams, non-executive chairman of Conviviality, is today stepping into the role of executive chairman until further notice.”

A source speculated: “Over a period of time the entire current board will go. The chairman will stay on for a period of time, and other members for a period of time, but then they will go.”

The saga began last week when it was revealed that an “arithmetic error” in Conviviality’s forecasting and soft margins in its Conviviality Direct division had forced it to issue a profit warning.

It announced that it needed to find £30 million to pay an HMRC bill that had “not been accrued for within its short-term cashflow projections”. The company brought in PwC to assist it in its forthcoming discussions with HM Revenue & Customs and its key stakeholders.

Then the story developed and Conviviality was reportedly looking for a £100 million emergency rights issue to shore up its finances, and now that has risen to £150 million.

“Who is to say it won’t go up again?” said a City source. “Somebody is turning over a lot of stones. Might it go into administration this week? That is where the money is. If they get the money that buys them a bit of time, and that will be used to replace the entire management team.”

DRN has heard from suppliers saying they have experienced difficulty in getting paid by Conviviality, and there are now reports of Bargain Booze stores suffering from depleted shelves. One franchisee said he was calling producers to try to secure emergency stock.

When Conviviality purchased 127 c-stores from Central Convenience in December 2017 for £25 million, it did so through the placing of 8,000,000 new ordinary shares at a price of 375p to raise £30 million. That raised eyebrows, as many expected Conviviality – which has a turnover of £1.6 billion in 2017 – to be a cash rich business.

Conviviality’s chief financial officer, Andrew Humphreys, left in October 2017, while non-executive director Jennifer Laing left last April after just 11 months on the board.

“Conviviality has a viable business model, but it’s caught in a liquidity trap,” said Phil Carroll, a retail analyst at Shore Capital. “The internal controls and processes have been found wanting, but it’s fixable. The question now is whether shareholders would want to back management with another cash injection.”

Another source said: “The half-year figures weren’t very good. It was classic CEO playbook, to look at the numbers and say that was the strategy all along [the group announced it had deliberately taken a hit to secure long-term supply deals].

“If there are structural problems within a company, they can be covered up, but it gets to a point where they can’t be covered up any more.

“You have to satisfy credit insurers. When Thresher went pop, it wasn’t because they ran out of money, but because the credit insurers said there’s a long-term threat to the reliability of getting paid.

“Conviviality needs to persuade investors to give them £150 million, before the credit insurers turn up and say there is a material threat to this business. If that happens, they’re dead.”