Hanover Finance says its investors could face more losses if Allied Farmers continues to sell assets for much less than what they are worth.
Allied Famers bought Hanover's loan book for $400 million in December 2009.
Its share price has plunged following asset writedowns, the receivership of its own finance arm, huge losses and cash problems.
Hanover has now written to its former investors saying Allied's mismanagement, including the fire sale of its assets, has eroded shareholder wealth.
Hanover director Mark Hotchin says Allied Farmers did not stick with the business plan it presented at the time of the deal and it is not clear exactly how much value has been lost.
The Serious Fraud Office is investigating Hanover Finance and Mr Hotchin's New Zealand assets have been frozen by request of the Securities Commission.
Both Allied Farmers and Hanover are in court later this month as Hanover tries to recover $5 million that Allied has refused to pay as part of the asset sale.