Shares in AIM listed Formation Group plunged 32% in early trading after the Cheshire-based wealth and talent management company said it may face a liability of as much as £11.6million relating to the collapse of Icelandic bank Landsbanki. The firm counts people like Wayne Rooney and Ant & Dec among it's clients.

Chief executive Neil Rodford described the incident as “unfortunate” but said the company had not yet made any definite provisions for the possible loss as conversations with the administrators were still ongoing. The money relates to a property development at Aldgate East underground station in London where Formation acts as project manager and part-underwriter.

Landsbanki, through its subsidiary Heritable Bank, had part-funded the project, for which Formation had underwritten half, or £11.6m, of the junior unsecured loan notes. Mr Rodford said that Formation’s clients who had bought the loan notes had been promised a return of 10% a year on their investment. However, he told reporters: “Our clients do not have any risk. They are in the strongest position because we underwrote the loan notes.”

“Given the current economic backdrop, the developer is unable to provide any certainty regarding the refinancing and consequently the likelihood of completing the development within the original timeframe,” said Rodford.

Work on the project has been halted with only 11 of the 22 floors completed and Formation admitted yesterday that it was unlikely to be completed on time. The developer is David Kennedy, the Irish property tycoon who is Formation’s biggest single shareholder, who owns 51.4% of the company.

He also said that initial concerns over another project in Whitechapel, London, had now been alleviated after the purchaser had made a further deposit payment. These are serviced apartments, where demand remains high, said Rodford.

Rodford expressed disappointment that this latest development had overshadowed what he called “positive results.”