Duffen has vehemently denied Hull's accusations but now the two parties are understood to have started talks over sorting out their differences with an out-of-court settlement rather than have the case played out in the law courts of London.
As reported by Telegraph Sport, the initial claim against Duffen was contained in a High Court action lodged last month in which Hull also allege Duffen used club money to fund personal expenditure running to six figures.
Telegraph Sport understands the club will seek to recover up to £300,000 in relation to this part of the claim. Hull also claim Duffen was regularly away from his office at the KC Stadium and want him to repay a portion of his wages.
The club's claim alleges that the payments from agents were channelled via an offshore company controlled by Duffen, Reef Securities Ltd registered in the Bahamas, and that those agents were then used by the club to seal player transfers.
Hull began their action against Duffen by successfully applying to have his assets frozen last month. Then at a hearing two weeks ago, Duffen's counsel, Lexa Hilliard QC, said Duffen denied Hull's allegations.
The order freezing his assets was lifted by Mr Justice Proudman but substituted with an order requiring Duffen to offer the club some of his assets as security. Property with an estimated value of £500,000 is understood to have been proposed.
Hilliard said that while he had consented to the orders 'this was not to be taken as an admission by my client of any of the allegations against him'.
The allegation that a Premier League chief executive colluded with agents for personal gain will again raise questions about the probity of the football industry.
City of London Police and the Inland Revenue have just concluded a two-year investigation into alleged corruption in the game and three leading football figures â€' Harry Redknapp, Portsmouth chief executive Peter Storrie and former club owner Milan Mandaric â€' face tax evasion charges. All three deny any wrongdoing.
The police probe followed an 18-month investigation into the transfer market by former Metropolitan Police commissioner Sir John Stevens.
Duffen arrived at Hull in 2007 leading a consortium that bought out then-owner Adam Pearson and taking charge of a club with no debt.
Having overseen the club's promotion to the Premier League and narrow survival last season, Duffen resigned in October last year amid grave concerns over the club's finances.
Pearson, returning as chairman at the request of owner Russell Bartlett, launched an investigation into the club's finances with particular attention paid to transfer spending.
The club's most recent accounts for the 2007-08 season contained a warning from auditors Deloitte as to its ability to continue as a 'going concern', and showed it had borrowings of £22 million.
The accounts also disclosed that the club's bank loans were due to be repaid in full by July 2010, and that Hull needed to make a surplus of £16m through player trading, commercial deals or fresh finance this season even if they stay in the Premier League. If they are relegated the surplus required grows to £23m.
The club said in a statement: 'The company believes that Mr Duffen has acted in breach of his employment contracts and fiduciary duties as a director, through the use of company monies for his own personal expenditure and other wrongdoings.
'The company also believes that he has acted in breach of his employment contracts and fiduciary duties as a director, through the payment of certain monies by third-party football agents to Mr Duffen's services company, in return for which Mr Duffen procured that Hull City contract with the agents for business.'
Lawyers representing Hull said the club were pleased with the court order made by consent in which Duffen agreed to provide security.
No at the KC Stadium or Duffen were available for comment today when contacted by Telegraph Sport.