Hanover Finance has withdrawn court action over a $5 million claim against Allied Farmers.
Hanover started the legal proceedings after Allied Farmers refused to pay the firm $5 million late last year, saying Hanover had breached some of the terms of their agreement when it took on Hanover's loan book.
Allied Farmers says the claim will now proceed as a civil dispute, and it will continue to defend the claim vigorously.
The dispute is expected to be heard later this year.