The subprime lender Cattles has taken its former auditor to court, claiming that PricewaterhouseCoopers failed to spot danger signs in its accounts during audits in 2006 and 2007.
The company said the failure led to it racking up £1.6bn in debts and liabilities.
Cattles virtually collapsed in 2009 and shareholders saw nearly all their value wiped out from what had been a FTSE 250 company.
Shares in the doorstep lender were suspended that year after it admitted it had underestimated the provisions it made in relation to bad loans. Cattles is currently being wound down.
A spokesman for the company and its creditors said: "After a thorough, independent and objective review of the merits of this claim, it is clear to us that PwC were negligent in their role as auditors. As a consequence, Cattles and its creditors suffered very significant losses."
PwC said it would "vigorously contest the claim".
"We are disappointed that this claim has been issued given the FSA's censure of the company for market abuse... This is an inflated and misguided claim," the auditor added.