Looming legal action by four former partners at collapsed law firm Cobbetts has stopped a final payment of almost £337,000 being made to Lloyds Bank.

The stalled payment was revealed in the final progress report by administrator KPMG.

Lloyds was owed £7.3 million by Cobbetts at the point of its collapse in 2013, with around £2.3 million classed as the "secure element" of the debt.

Since then almost £2 million has been returned to the bank but a final payment of £336,687 will not be paid because of the potential legal action launched by the former partners.

The final KPMG report states: "The joint administrators had intended to make a final distribution to the bank before the end of the administration.

"However, during the period the joint administrators received notice of a potential legal action against the LLP by four former members, who are seeking to claim that money owed to them in relation to capital and tax reserve accounts, should have been held on trust."

It added that the matter would be investigated further by liquidators Lyn Vardy and Toby Underwood of PwC as the firm moved from administration to creditors' voluntary liquidation.

Appointed as liquidators on July 8, they will now make a decision on what unsecured creditors will receive.

It is not yet clear what that figure will be but some reports in the legal press have suggested it could be as low as 2p in the pound.

The latest KPMG report confirmed that just over £3.9 million had been received from the pre-pack sale of Cobbetts to DWF, bringing to an end 175 years of trading at the law firm.

A previous statement of affairs document revealed Cobbetts owed £91.6 million to unsecured creditors but KPMG said that amount was set to be "substantially lower as certain claims have been partially mitigated".

Cobbetts' liabilities came on the back of huge lease deals that were agreed.

An earlier report from KPMG revealed the firm owed £74.4 million in outstanding lease agreements following four office moves in a relatively short period - including to its One Colmore Square base in Birmingham.

The pre-pack sale saw 419 of Cobbetts' employees and partners from its four offices, in Birmingham, Manchester, Leeds and London, transfer to DWF.

The finance litigation team was acquired by Walker Morris in Leeds.

The final progress report also revealed a number of matters had been settled.

One involved Birmingham-based Wesleyan and an insurance refund of almost £118,000 received from Cobbetts' professional indemnity insurer Locktons.

Wesleyan had argued that it was due any refund as the insurance policy was discharged from money it had loaned to Cobbetts.

KPMG said an agreement had now been reached with Wesleyan, the details of which would be finalised by the liquidators.

Already more than £1 million, the final costs for the administration were also revealed.

Over the total period KPMG incurred time costs of £1.2 million, representing 3,493 hours at a average rate of £335 per hour.

The administration cost will also include a further £300,000 in expenses, incurred by KPMG between December 2013 and June this year, including £235,000 in administrators' fees.

Further costs incurred during the administration included legal fees of £65,000 paid to Pinsent Masons and £30,000 for a detailed search of Cobbetts' e-mail server carried out by KPMG's forensic IT services, which was requested by the creditors.