Merchant Equity bought the MFI store business from what is now Galiform in 2006 and was given a warranty on the value of various assets and liabilities.
Since then, Galiform revealed at yesterday’s preliminary results that Merchant Equity “has made a number of notifications alleging breach of this warranty”. The private equity group wants£57 million from Galiform.
Galiform said it “strongly rejected” the allegations, but Merchant Equity has begun legal proceedings on the matter.
Galiform said: “Having taken extensive advice, the board considers Merchant Equity’s total claim is grossly inflated, principally because the majority of the claim is entirely without merit and Merchant Equity has chosen, incorrectly, to ignore a substantial number of offsetting items”.