Take tenants to court or adjudication?

Tenancy Deposits

4 students had a joint and several AST for 12 months. During that time one tenant gave me a guarantor form that had been forged, though the credit check was fine, the relative involved had no knowledge of this and the signature was forged by the student. I found this out when this tenant was in arrears and wrote to the relative. The other three tenants were paying on time.

The tenancy continued as most of the arrears were paid over time. At the end of the tenancy the tenant with the forged guarantor document owes about £700 in rent. Other issues in the house mean that the £2000 deposit does not cover my costs which are about £2700.

The deposit is with the DPS. As the deposits were all paid late and not together so there are two deposits and two lead tenants. I am not sure whether to take them to court first or get the deposit back first through adjudication at the DPS. I have offered the tenants a deal where they just pay me the deposit and we forget about the rest but they have refused. I have no idea how much work it would be to take them to court. There are plenty of emails (hundreds) substantiating my case.

Any advice about which approach would be best, or information about similar cases, I would be very grateful.