The legal battle over ownership of Henry Moore’s Draped Seated Woman sculpture has intensified with Tower Hamlets Council, which plans to sell the work, warning that it may have to settle the matter in court.

The sculpture, known as “Old Flo”, was bought by London County Council for £7,400 in 1962, and displayed at the Stifford Estate in east London until 1997, when Yorkshire Sculpture Park borrowed the piece.

A council spokeswoman said the plan was to send the sculpture to an auction at Christie’s in June. As Museums Journal went to press, Old Flo was still in Yorkshire Sculpture Park. Tower Hamlets had hoped to sell the work at auction later this month.

However, the London borough of Bromley has since claimed ownership of the piece. Its bid is backed by the Henry Moore Foundation, Tate and the Art Fund.

Lawyers acting for Bromley Council said new research showed Tower Hamlets’ ownership was “incorrect”, meaning the Old Flo sale could not proceed. “Legal discussions are ongoing,” said a Bromley Council spokeswoman.

When the London County Council was replaced by the Greater London Council in 1963, Stepney was transferred to the newly created Tower Hamlets Council.

But the Art Fund and Bromley Council claimed that while this included the land and buildings comprising the Stifford Estate, Moore’s sculpture was not listed in the transfer order.

This meant that the work remained the property of the Greater London Council until its dissolution in 1985, when all its assets were entrusted to the London Residuary Body.

When this was wound up 11 years later, all of its remaining assets, including Old Flo, were transferred to the borough of Bromley.

Tower Hamlets Council is defending the proposed sale, as “no one had disputed ownership for the past 27 years”.

The London borough said that it was “irrelevant” that the work was not named in the transfer order.

Tower Hamlets said it needed to make savings of £100m by 2015, and that proceeds from the sale would help fund key services.