Former directors at Equitable Life are fighting the threat of court action over their role in the life assurer's cash crisis.

Equitable Life's current bosses have fired the opening salvo in proceedings which could see 20 past board members, and former auditors Ernst & Young, sued over decisions which left the firm with a �1.5bn shortfall.

The former directors are being asked for "their explanation for a number of issues of concern", Equitable said.

The assurer's former lawyers, Denton Hall, have also been asked for "an explanation of particular aspects of their advice".

"In all these cases, if we do not receive satisfactory explanations, and if it is cost-effective to do so, we will commence legal proceedings," Equitable chairman Vanni Treves and chief executive Charles Thomson said in a letter to policyholders.

Former chiefs stand firm

But Peter Martin, a former Equitable head who is representing most of the 20 under fire, said they would mount a vigorous defence.

"We will defend our reputations to the last," Mr Martin told the Financial Times newspaper.

"This will give us an opportunity to put across our side and demonstrate we always acted in the best interest of policyholders at all times."

Ernst & Young said it was "confident" its audits had been "appropriate and robust".

'Serious concerns'

Equitable's threats follow an investigation by lawyers Herbert Smith into the decisions which left the assurer burdened with payout pledges it was unable to meet.

A separate probe by PricewaterhouseCoopers found "serious concerns" over the work of Ernst & Young.

The assurer has closed for new business, sold off assets and undergone tortuous talks with policyholders in an effort to settle its cash crisis.

Equitable earlier this week gained High Court permission to approach policyholders with a compromise solution.

Long grind

Equitable said that, while the letters to former directors and Ernst & Young could lead to litigation, it was obliged to consider replies before escalating action.

Any responses would be considered in January, the assurer said.

Any litigation would see court hearings next year, with a final resolution not likely "for several years".