SFI Group is likely to sue its former auditors Horwath Clark Whitehall (HCW).
It said that the mistakes and discrepancies in its accounts were of such a size it would pursue a claim against its former auditors.
SFI appointed Simmons & Simmons to conduct an investigation last year and to adviser the high street operator of possible remedies.
Simmons & Simmons has since advised HCW that a claim was likely to be made against them.
This morning SFI revealed exceptional items in the accounts to May 2003 of £92.1m including a £67m charge against the carrying value of fixed assets.
Existing SFI shreholders will receive 12.5 per cent of any proceeds from litigation against HCW. The rest will be used to pay down group debt.
SFI finance director Tim Andrews quits (8 April 2004)
SFI Group gets bank lifeline (8 April 2004)