Just Car Clinics, the collision repair chain that has lost hundreds of thousands of pounds since being bought by BikeNet in January last year, is about to launch a major legal offensive against former owner Dixon Motors.

The accident repair chain is alleging a “breach of warranties included in the business purchase agreement” which led to the group overstating its trading results at three of the 12 locations. It is now pursuing a potential seven-figure claim.

Just Car Clinic's financial results for the 15 months to December 31, 2003 show a loss of £199,821 since it was acquired by former online motorcycle retailer BikeNet.

Results for the previous year showed losses of £121,184 for the old BikeNet business. But it's not all bad news – turnover is up 1% to £21.6m. The three sites hit by poor accounting have all improved margins and traded profitably for the first quarter of this year.

Speculation is growing that the company could be taken over, while industry watchers suggest Dixon Motors parent Royal Bank of Scotland might be forced to buy back the business in the face of the legal action.

Barry Whittles, Just Car Clinics chief executive, says trading for 2004 is in line with expectations and he is looking forward to a better performance this year.

“Much has been achieved despite a number of challenges which arose during the first year of the new business,” he says. “The quality of our team, infrastructure and support functions means we are in an excellent position to develop with our insurer partners.” Just Car Clinics says it has no plans to sell the business and is acctually looking to expand. It hopes to add two to three sites a year as it targets a national repair network.