Cattles accused the Big Four firm of negligence in its auditing of the group.
It was alleged that basic audit checks should have revealed that the loan book of Welcome Financial Services - Cattles’ biggest unit - was much weaker than stated and PwC should not have signed off the 2006 and 2007 financial statements.
The multimillion-pound claim was brought on behalf of creditors to Cattles and Welcome Financial Services.
Cattles said PwC’s failure to spot major holes in its accounts resulted in it piling up £1.6bn in debts and liabilities, bringing the FTSE 250 firm to the brink of collapse and forcing it to suspend shares in 2009.
PwC has been defending the claim since it was lodged in 2013, stating that the lender’s publicly stated accounting policy for bad loans was reasonable.
In 2009, Cattles admitted that it had underestimated the provisions it needed to make for bad loans and restated its 2007 accounts.
The company entered into a financial restructuring scheme in March 2011.
The Financial Services Authority (FSA) publicly censured Cattles and Welcome in 2012. Three former Cattles and Welcome finance directors, John Corr, Peter Miller and John Blake, were fined and banned by the FSA for misleading financial reports.
The Accountancy and Actuarial Discipline Board, an enforcement arm of the Financial Reporting Council, is still investigating the Cattles scandal.
A high court trial was due to start last week but instead talks began outside of court.
Both parties attended a brief court hearing on Monday to inform Mr Justice Burton on what progress had been made.
PwC said in a statement, “Cattles, Welcome Financial Services and PwC confirm that they have resolved the claims between them. The terms are confidential.”