Collapsed finance company Hanover Finance has gone on the offensive today, claiming that Allied Farmers - which took on much of its business - has lost shareholders' money through mismanagement.

In a letter sent to Hanover Finance investors today, director Mark Hotchin and chairman David Henry say they are "alarmed at the continuing erosion in the value of assets" that were transferred to Allied Farmers under a debt for equity swap and is calling for its managing director to be sacked.

Hotchin and Henry accuse Allied's Rob Alloway of 'deflecting media attention from issues within its own company by promoting misinformation against Hanover'.

"We are no longer prepared to sit aside and allow this to happen and will actively campaign on behalf of shareholders, including seeking to have Rob Alloway removed from the Board of Allied."

Alloway resigned from the executive in September but said last November that he was planning on stay with the company for another six months.

Hanover Finance in December announced it had launched legal proceedings against Allied Farmers over its refusal to pay the company $5 million.

This case is going before the High Court later this month.

Chapman Tripp, which acts for Hanover, has served papers against Allied Farmers over its decision not to make the payment, which was part of the ill-fated deal that saw Allied take on Hanover's loan book.

The deal issued billions of shares in the rural services company to the failed financier's depositors.

Henry and Hotchin say Allied is ignoring the plan it put forward to investors in the 2009 deal, and that the company's financial difficulties were worse than what was presented at the time.

In October, Allied doubled its loss to $77.6 million in the 12 months ended June 30 after taking a $40.1 million hit on the collapse of its Allied Nationwide Finance unit. The Hanover assets were valued at $396 million before the swap, and are worth less than a quarter of their value since Allied took on the loan book.

In December, the Securities Commission froze some of Hotchin's New Zealand assets in a bid to make sure any successful claims against Hanover would at least win some compensation.

Allied's shares fell 0.1 cents to 1.9 cents in NZX trading today.