Norwich chairman Alan Bowkett has confirmed the club will be taking legal action against a story in Sunday's News of the World newspaper.
The article had claimed the club could go into administration by Thursday if they could not find major new investors and that financial experts Ernst Young and KPMG had both been called in as potential administrators.
Bowkett firmly denies the story and told the club's official website: "In all my years working in corporate finance I have never read such tosh and complete fabrication."
He added: "The News of the World will be hearing from our lawyers and we look forward to claiming substantial damages."
Chief executive David McNally added: "The story in the News of the World is completely untrue.
"As far as the club is concerned we consider the story defamatory and accordingly we have placed the matter in the hands of our solicitors."
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