According to the Telegraph, lawyers acting on behalf the Durham Free School's trustees have accused the Education Secretary, Nicky Morgan of being "tainted with bias" over her decision to withdraw funding for the school, effectively ensuring its closure.
In January an Ofsted report found that leadership, teaching, pupil behaviour and achievement were all "inadequate", the lowest possible rating.
The report said: "Some students hold discriminatory views of other people who have different faiths, values or beliefs from themselves."
The inspection followed the Government's introduction of new 'British Values' tests brought in following the Trojan Horse scandal which saw hard-line Muslim groups attempting to influence schools in Birmingham.
The Education Funding Agency, which allocates money for schools, also said it has "serious concerns about financial management, control and governance" at Durham Free School.
The trustees reportedly say they want to initiate a judicial review into the Education Secretary's decision.
Earlier this month, Durham Free School parent, Billy Lau told Premier that the school has done nothing wrong, speaking on the 'News Hour', he said: "This Ofsted report is just simply untrue.
"Everything that's in that report just doesn't happen," he added.
Premier has contacted the Department for Education and is waiting for a response.