The official receiver is looking into the business activities of Preston-based legal expenses provider Headroom Expenses.

It comes after Anderson Eden Solicitors filed a winding up petition against the company's predecessor, Axium Legal Expenses, in November.

Axium's name was formerly changed to Headroom before it was put into compulsory liquidation on 20 January.

Dennis Wally, an Anderson Eden director alleged Axium had refused to pay an outstanding claim on an after-the-event policy despite being ordered to do so by a Liverpool court.

But Headroom's chief executive David Hargreaves said the argument centred on a dispute over a policy refund.

Meanwhile, the Claims Standards Council (CSC) has ended Axium's membership of the body.

A CSC spokesman said: "The company is no longer a member because he [Hargreaves] didn't pay the fees and continues to refuse to pay outstanding fees."

Hargreaves responded: "We were a founding member of the CSC and resigned because we didn't believe in self regulation in the sector."