Housing Benefit Rent Arrears

Rent Arrears

Hi
We have a property in Bacup Lancashire and recently had a tenant in on HB sponsored by Rossendale BC who paid the deposit and co signed the tenancy agreement, this was supposed to be direct payments from the council to us via our letting agent.
a couple of months passed and no rent so we contacted the letting agent and the council who said they were waiting for the single parent to fill in the forms, this dragged on for a further 2 months until the letting agent served notice and the tenant came out [not sure how they did this but it was swift so not entirely sure it was done in the correct manor]
we have since seen the girl who tells us she filled in the forms twice but still no rent, in the mean time her partner who wasn't on the agreement had been working on the house and now is a right mess, they run up the gas and electric so now that's cut off also.
my questions is as the council sponsored her with the bond [which they released to us towards the damage after she had come out] are they liable for the outstanding rent with or without this mystery signature ?
is the letting agent liable for anything ?
and should we pursue court action against the council or the tenant for the arrears?
we have forwarding addresses etc.
Thanks
Glyn