Ildana's directors John and Mairéad Murphy have alleged that Pure Telecom, which entered into an agreement to buy Ildana last December, illegally took �?�19,000 out of the company prior to the collapse of the deal.

Pure Telecom, which invested �?�250,000 in "interim funding" in Ildana after the December agreement and is understood to be Ildana's largest single creditor, denies this.

In response to a plenary summons issued by the High Court at Ildana's request, Pure has filed an affidavit providing full details of all its financial dealings with the insolvent broadband provider and refuting any allegations of wrongdoing.

It is understood Ildana, which has not filed accounts since February 2004, had been in financial difficulty prior to the approach by Pure last year. According to Pure's submission to the High Court, when the heads of agreement had been signed by the two parties, Pure advanced �?�250,000 to Ildana.

At that stage Pure became involved in the day-to-day running of Ildana and began updating Ildana's financial records. As that process wound on relations between the two sides deteriorated and Pure, citing "irregularities" in Ildana's accounts, decided not to proceed with the transaction.

Ildana then initiated legal proceedings against its former partner. Following an initial hearing two weeks ago the case is listed for mention at the High Court this Tuesday.

With the collapse of the deal, meanwhile, Ildana has been forced to cease trading and has scheduled a creditors' meeting for 24 April at which the company will be put into liquidation.

Ildana had received grants from the Department of Communications to provide broadband internet services via satellite to community broadband schemes in several remote areas including Gaoth Dobhair in Co Donegal and Ballyferriter, Co Kerry.

Some 200 Ildana customers will now have to make alternative arrangements with other service providers.