An investigation is to be launched into Chester Street's sale of Iron Trades after creditors claimed this week it may have been undersold by £47.5m.

Chester Street was forced into provisional liquidation in January after receiving 12,000 mainly asbestos-related claims, some dating as far back as the 1950s.

Prior to its closure, Chester Street was paying about £2.5m in claims a month.

On Tuesday, creditors voted unanimously to accept a scheme to save the company from liquidation.

But if liquidator Pricewaterhousecoopers (PWC) finds discrepancies in its investigation, it will have the power to send the company back into liquidation.

Although the scheme will allow the company to continue to process claims, it is feared that thousands of asbestosis sufferers will still miss their payouts because they were affected before 1972 when employers' liability became compulsory.

Chester Street sold Iron Trades Insurance to QBE International in 1999 for £175m, despite an internal valuation of £222.5m.

Kenneth Ross, a creditor at the liquidator of Upper Clyde Shipbuilders, asked why the company had been sold for less than it was worth.

He also demanded to know the future of £27m left in an escrow account following the sale.

It also emerged that Robert Hardy, the former chief executive of Chester Street, was given a one-off success payment of almost £440,000 upon the sale of Iron Trades.

QBE put Iron Trades' £80m retail division and its motor website into run-off in November 2000 after failing to find a buyer despite approaching 50 insurers.

PWC liquidator Daniel Schwarzmann said it was too soon to estimate Chester Street's total liability, nor the percentage of each claim it would be able to meet.

He said the Financial Services Authority (FSA) would have investigated QBE'S suitability to buy Iron Trades at the time of the sale, but would not have looked at the disposal itself.

“I will review all paperwork to see that that they got the best value they could for that company,” Schwarzmann said.

He said the escrow account was not due to be released until 2002.

However, QBE said on Tuesday that it planned to issue a statement on the escrow issue this week.

Philip Grant, who became chief executive of Chester Street after Iron Trades was sold, defended the sale. He said the shortfall between the valuation and the sale price included “deferred tax”. “We sold it for the best price attainable,” Grant said.

He said there were two impetuses behind the sale of Iron Trades: the need to cash in an asset to pay mounting claims costs and advice that it was the best time to sell an insurance company of that kind.

Grant said the payment made to Hardy was not unusual in such sales.

Tuesday's meeting was attended by two asbestos-affected shipyard workers and the widow of a worker who died of the most severe form of asbestosis.

The three, who flew from Glasgow to attend the creditors' meeting, said they were disappointed by the outcome.

Edward Docherty, a pleural plaque sufferer who had his £10,000 compensation cheque from Chester Street stopped in the post when the company collapsed, said he could not see any hope for asbestos victims in the scheme.

Jane Maitland, whose husband William, a shipyard joiner, died two years ago, questioned the FSA's whereabouts as Chester Street floundered.

“The wider issue is that if they let this insurance company get away with this, the door is wide open,” Maitland said. “I want to see some justice and I don't think this is just.”