The law firm Quinn Emmanuel  Urquhart & Sullivan, brought in by PwC to investigate what, if any, potential claims exist against third parties, is understood to be preparing to launch action against EE, 02 and Vodafone over allegations the operators ‘forced’ Phones 4U out of business, according to a report in the Daily Telegraph. According to the paper’s source, the alleged claim runs to the ‘upper hundreds of millions’.

O2 has said it ‘vigorously denies’ the allegations, while EE and Vodafone have made no comment.

In its latest update on the administration, circulated to creditors, PwC states: ‘Pre-action correspondence has been issued to potential defendants and expert witnesses have been engaged to assist us in progressing the matter further. Due to the potentially material commercially sensitive nature of these investigations we do not think it would be appropriate to disclose any further information at this stage.’

Phones 4U collapsed in 2014, after losing contracts to sell phone and contracts with the big mobile operators. It could not service its debts and called in the administrators, with the loss of more than 2,000 jobs in 365 stores.

The latest creditors’ report, covering the first six months of this year, says that total receipts from mobile network operators (MNOs) stood at £32.5m (net of VAT) at 20 July, unchanged from the previous report.

PwC states there are two remaining MNOs from whom it expects to recover further amounts over the course of the administration. The firm has reached a position with one MNO whereby all outstanding claims relating to data discrepancies, identified between Phone 4U records and those of that particular MNO (arising both pre and post administration), have been agreed. Payments from this MNO are set begin later in 2016 and continue until 2024.

As regards the other MNO, PwC says new claims have been identified since January 2016 which have required further work to agree, with an estimated completion date of end of September 2016. PwC is expecting payments within the next six months, although none have been received to date.

The report states: ‘As we have previously reported, this position is complicated by the fact that we have received a pre-action letter from that relevant MNO alleging a very substantial damages claim against P4U for, amongst other things, breach of contract. Another letter reiterating the claim was received during the period covered by this report. Our view remains that this claim is without merit and litigation may be required to resolve the issue. It is likely that this will impact upon at least the timing for resolving the total amount due from that MNO.’

PwC also records its success regarding one of two VAT issues affecting the administration. The first issue concerned the extent to which the Phones 4U companies could be liable to account to HMRC for VAT in the course of the relevant administrations on connection commissions earned under the MNO contracts. PwC says a high court ruling has found in in its favour, marking ‘an important milestone in the administration’

The second significant VAT issue concerns financing arrangements entered into by Phones 4U in June 2013 and September 2013 which involved trade bill discounting facility agreements between Phone 4U and Barclays. PwC says there is a question mark over some £37.4m of VAT which it maintains may have been calculated using an incorrect methodology.

The report states: ‘We intend to engage in further discussions with HMRC on this second issue over the coming weeks. In due course it may be necessary to apply to the High Court for directions in respect of this matter.’

A PwC spokesman said: 'We cannot comment on speculation.'

The Joint Administrators’ Fourth Progress Report is here