A case brought against one of Scotland's best known law firms has been dropped.

Glasgow-based Levy & McRae was being pursued by the liquidator of Heather Capital who were seeking access to files.

It came after a £400m hedge fund set up by entrepreneur Gregory King collapsed in 2010.

At a preliminary procedural hearing at the Court of Session before Lord Woolman, Richard Keen QC, acting for liquidator Paul Duffy, had alleged failings in how several key issues were handled. 

The claims centred around how business accounts had been handled, including work by the firm's now former partner, Peter Watson.

Mr Keen, bringing the action, said he had hoped to secure files relating to the arguments from the firm. 

He said the liquidator was told by Levy & McRae it held two files on Heather, but was refusing to release a third file on Mr King.

"We are anxious to recover the King file," Mr Keen said at the time.

For the defenders, Alistair Clark QC insisted the allegations made by the liquidator against Levy & McRae and its partners were "extremely grave".

But the defenders' position was that they were "without foundation", he said.

Mr Watson, 61, who left Levy & McRae the previous year to set up his own law firm, said he was pleased the action had been dropped at the Court of Session.

He added: "I am looking forward to serving my clients now it is clear that there was no valid basis for this claim."

Levy & McRae was just one of several companies involved in actions by Heather's liquidator, Ernst & Young, as it sought to recover money from the hedge fund.

Others include lawyers Burness Paull & Williamsons LLP and Knight Frank LLP.

Levy & McRae, which provides legal advice to the Herald & Times Group, declined to comment.