Heath Lambert is facing its day in court over a long-running multi-million dollar battle over films that flopped at the box office - but may yet avoid taking centre-stage.

Speculation was increasing this week that the broker could settle out of court in a case that could be crucial to five similar disputes, which together could cost it hundreds of millions of dollars.

Heath Lambert is being sued, along with investment bank JP Morgan Chase, AXA, Copenhagen Re and Sphere Drake.

Heath Lambert arranged insurance cover to protect the bank, then Chase Manhatten, after it lent money to fund movies: The People vs Larry Flynt, The Mirror Has Two Faces, Amy Foster, Apt Pupil and U-Turn.

All failed at the box office, but the insurers claim they should be able to avoid paying claims on the grounds that they allege that there was fraudulent non-disclosure and misrepresentation by Heath Lambert when it placed the risks.

The insurers allege that the broker kept quiet about experts concerned about the transactions.

Heath Lambert vigorously contests the allegations.

At stake for Heath Lambert is $7.1m, a spokesman for the company said. The case opened last week and was adjourned to 16 October.