US hardware giant Lowe's has potentially thrown a spanner into Woolworths' moves to offload its Masters hardware stores.

Key points: Woolworths plans to close Masters and sell-off 82 store sites

Woolworths plans to close Masters and sell-off 82 store sites US hardware giant Lowe's owns a one-third stake in Masters

US hardware giant Lowe's owns a one-third stake in Masters Lowe's has launched court action to seek the appointment of a liquidator

Lowe's was a one-third joint venture partner with Woolworths in the failed Masters hardware chain, which was a spectacular cash drain for the Australian retailer and failed to make a dent in the sales or earnings of Wesfarmers-owned rival Bunnings.

Last week, Woolworths announced that all Masters stores would close before the end of the year, their stock would be liquidated and the properties sold, with expected gross proceeds around $1.5 billion.

However, the last part of that equation has been thrown into doubt by legal action that Lowe's has launched in the Federal Court of Australia.

The US company has alleged that Woolworths engaged in unfair behaviour in its conduct towards its joint venture partner.

"Woolworths has conducted the affairs of Hydrox in a manner oppressive and unfairly prejudicial to Lowe's, including by wrongfully and in bad faith seeking to terminate its joint venture agreement and by seeking to exclude Lowe's from the management of Hydrox," Lowe's told Bloomberg in a statement.

The Australian retail giant had exercised an option to terminate its joint venture with Lowe's, but acknowledged in its statement last week that it was in dispute over the process to value Lowe's shareholding in the business.

Investors Mutual director Anton Tagliaferro said the American company appears unsatisfied with the bargain basement price Woolworths has negotiated in its desperation to exit hardware.

"Lowe's are unhappy with the scorched earth valuation that Woolworths came up with, because Woolworths were very happy to move forward and exit the Masters joint venture," he told the ABC.

Masters closure could be delayed 'a number of months'

Woolworths told the ABC in a statement that Lowe's filed the court application in its absence.

"Woolworths is yet to be served with documents relating to this application," Woolworths said in an emailed statement.

Lowe's is seeking to have a liquidator appointed by the Federal Court to oversee the wind-up of the Masters joint venture.

Woolworths needs Lowe's approval to sell the 82 sites that the Masters stores are located on, for which it already has a preliminary deal with Aurrum Group, Spotlight and Chemist Warehouse.

Mr Tagliaferro said that might delay the Masters closure significantly.

"Certainly it's going to be postponed for a number of months and delayed," he said.

"If it ends up in court, it could go on for quite a while."

However, Woolworths said the stock sell-off and its sale of the Home Timber and Hardware business to Mitre 10 owner Metcash will be proceeding as announced.

"The transactions relating to the Home Timber and Hardware sale and Masters inventory clearance by GA Australia are proceeding as announced," Woolworths said in its statement.

Woolworths last week also announced a $1.2 billion full-year loss, its first result in the red in 23 years.