Two finance firms have clashed in court over £3 million they both claim they were owed following the demise of a disgraced property tycoon’s empire.

The dispute centred around houses sold by the administrators of Lexi Holdings, the business run by shamed entrepreneur Shaid Luqman until it collapsed in 2006 owing £100 million, reported MEN media.

Barclays Bank and Chester-based The Funding Corporation both said they were entitled to the proceeds of the sale of ten properties in the wake of Lexi, which had offices in Manchester and London, going bust.

The two lenders went head-to-head in London’s High Court, where a judge ruled how the fund should be carved up after hearing how both became “innocent victims” of a “massive fraud” masterminded by Luqman and members of his family.

The court was told Barclays had provided a credit facility to Lexi, which was set up by Hale-based Luqman, to make secured bridging loans.

Meanwhile, in 2004, TFC struck a £5 million deal with Luqman to buy out Lexi’s interest in loan agreements it had made on a string of properties.

But TFC did not know the properties concerned had been transferred to offshore businesses that were also secretly controlled by Luqman and all had had inflated valuations carried out on them.

Barclays appointed KPMG as administrators in October 2006 and argued a series of charges it had secured on Lexi’s assets meant it was entitled to the proceeds of the sale of the properties involved.

But TFC lodged a claim against Barclays, which was heard by Judge David Cooke, who concluded TFC had been duped by bogus paperwork prepared by Lexi and the other companies Luqman set up as part of the fraud.

Despite stating TFC had been “slapdash to put it mildly” in terms of the precautions it took when buying the loan agreement rights, Judge Cooke said the contracts it entered into were enforceable.

He ruled it was due around £1.5 million raised by the sale of five houses. However, he said there was a group of five other properties over which TFC had secured no security, meaning Barclays could lay claim to the remaining £1.5 million.

In 2004, Luqman was named ‘Young Entrepreneur Of The Year’ by Ernst and Young, travelled in his own jet and was worth £300m.

But, in 2007, he was banned from running a company for 15 years. He was jailed for two years in July 2007 for contempt of court and found liable for more than £100m in funds allegedly misappropriated from his collapsed business empire.

In 2009, he was jailed for another 12 months for contempt after he disposed of two Range Rovers and two valuable paintings and sold land in Pakistan.

He was arrested again in April after applying for travel documents, which was in breach of a previous court order, and given 10 months’ jail suspended for 18 months and ordered to wear an electronic tag for three months.

An arrest warrant was issued for him in September after it was feared he had fled the country, despite having been fitted with a tag.