Euro RSCG, the French media group, is seeking an injunction preventing Sir Terence from taking a shareholding in and becoming a director of Fitch.
The writ, issued on Tuesday, refers to an agreement between Euro RSCG and Sir Terence dated 2 July 1990, which it is claimed restrains him from becoming involved in another company in competition with Euro RSCG until 2 July 1993.
A spokeswoman for the French group said: 'Terence Conran has a certain type of contract with us which leaves him with certain obligations. The matter is in the hands of the lawyers.'
A spokesman for Fitch said the company had taken advice and did not believe the rescue deal would be jeopardised by the legal action.
Rodney Fitch, chairman of Fitch, said: 'Sir Terence Conran has always stressed that whilst he remains under contract to Euro RSCG, his involvement at Fitch will of necessity be as an investor and non-executive.
'Sir Terence has been properly advised on his involvement with Fitch and we remain confident that his obligations to Euro RSCG will not be compromised and that this action will not succeed.'
The deal to rescue Fitch, whose shares have been suspended at 41p since July, was put together between Sir Terence, Jean-Francois Bentz and Bernard Roux.
Mr Roux was once president of Roux Seguela Cayzac et Goudard, which went on to become Euro RSCG, and Mr Bentz was its former head of design. These links may help explain the French group's pique at the deal.
In the restructuring of Fitch, Sir Terence would pay just over pounds 1m for a 25 per cent stake, while Mr Bentz and Mr Roux would pay pounds 1.5m for 35 per cent. Sir Terence and Brand Trust, Mr Roux's and Mr Bentz's vehicle, would pay 11.7p a share for their stakes, against the 41p at which the shares were suspended in July. The company will raise a further pounds 625,000 by selling its Fitch Benoy architectural arm to its managing director, Graham Cartledge.
The deal is to go to shareholders for approval on 19 October.
Rodney Fitch will retain just 3.5 per cent of the company. His association with Sir Terence goes back 30 years.
Fitch's problems were triggered by its move into custom-designed premises in Kings Cross, London, while it was unable to let other properties it still held leases on.Reuse content