Four ex-Cobbetts partners have served notice of potential legal action over the defunct LLP's insolvency, it has emerged.

The move has blocked a final payout to the firm's major creditor, Lloyds TSB, which was owed £7.3m by Cobbetts when the national firm went down in early 2013.

A final progress report by administrator KPMG notes the potential legal action against the LLP by the quartet, who claim money owed to them in capital and reserve accounts should have been held on trust. 

Lloyds TSB Bank holds debenture security on cash advanced two weeks before Cobbetts went into administration. The security was granted to allow money to be advanced to fund salary payments and drawings by members.

Of the £7.3m owed to Lloyds at the time of the administrators’ appointment, some £2.3m was secured.

The administrators’ report notes that a final distribution to the bank of £336,687 has been ‘postponed’ while liquidators investigate further.

Speaking to the Gazette last month, former Cobbetts partner Andrew Wright, who left in February 2012 to join Canadian outfit Gowlings, alleged he had suffered 'poor' treatment when the firm failed.

As Cobbetts' biggest individual creditor, Wright lost almost all his money when the firm went down because only those who were current partners had their capital contributions protected.

PricewaterhouseCoopers, appointed as liquidator on 8 July, will make a decision on what unsecured creditors receive.

To date, £3.9m has been received from the controversial 'pre-pack' sale of the business to national firm DWF and from subsequent work in progress.

A previous document entitled ‘statement of affairs’ stated that £91.6m was due to unsecured creditors. KPMG now says these figures should be ‘substantially lower’ as certain claims have been negotiated down.

The progress report adds: ‘It is anticipated that Lloyds’ secured claim, and any preferential creditors, should be paid in full with sufficient funds available to make a distribution to the unsecured creditors.’ This is likely to be in the form of a single dividend payment.

For the final period, running from 7 June to 31 July, the administrators will receive £85,633 in fees. A progress report published last month into the administration showed KPMG incurred £1.084m in costs up to 6 June.