The liquidator of failed carpet maker Feltex has launched court action against accountancy firm Ernst & Young.
Feltex - a publicly-listed company - collapsed in late 2006, wiping out shareholder investments of $250 million.
Liquidator McDonald Vague says the court action relates to an incorrect half-year financial statement of 30 December 2005 prepared by Ernst & Young.
McDonald Vague holds that the financial statement significantly impacted on a claim the liquidator had filed against Feltex's former directors.
The liquidator announced in May last year it had made a final confidential settlement of the claim against the five directors.
Several months afterwards, in early December, the liquidator issued proceedings against Ernst & Young.
The liquidator says the accountancy firm has failed to engage in any dialogue towards a resolution.
Ernst & Young says the claims are baseless and will be vigourously defended. It says the accounts in question did not involve an audit.
It says a Securities Commission report into the failure of Feltex concluded that the financial reporting had not impacted in the demise of the company.
McDonald Vague says it is expecting a response from Ernst & Young by the middle of this week.