by Chris McLaughlin

LABOUR finance chiefs are making “frantic” attempts to reschedule up to £14 million of outstanding loans amid legal warnings that the party is “skating on thin ice” in its financial management.

officers have been told in private talks with financial advisers that radical steps might have to be considered to restructure the party in order to limit the personal liabilities of its national executive committee members if finances are not brought under tighter control.

One last resort option being canvassed is to turn the party into a limited company, although Tribune understands that neither the treasurer, Jack Dromey, nor the National Executive Committee collectively has been consulted on the possibility.

Discussions on whether the party could be faced with prospect of being forced into administration - leading to the sale of its property assets and making individual members of the NEC personally liable to creditors - have been taking place against a background of acrimonious rows with donors who are demanding their cash be returned.

A source close to the talks said: “Some of them are apparently spitting blood and all of them are pissed off. There are frantic attempts going on to reschedule the loans again because the legal advice is that the party could be skating on very thin ice.”

Of 12 who provided a total of £14 million, four were at the centre of the cash for peerages row after their names were blocked by the honours scrutiny committee after they were put forward by Number 10 during Tony Blairs premiership.

The latest talks about an emergency financial strategy took place in the margins of a special NEC meeting last week which was called to allow officers to brief NEC members on finances and financial control, party management and structure.

The party is servicing a £13.5 million overdraft from the Co-op Bank, included in a total of outstanding borrowings which stands at £20,178,392 compared to the Tories £16,312.050.

The latest Electoral Commission quarterly report shows that in July to September last year Labour accepted £4,733,536 in donations and repaid £111,866, all but £2,500 of which was reported late.

Since then, £600,000 donated by north east businessman David Abrahams has been placed in an escrow account pending the outcome of inquiries into its legality. It has yet to be decided whether the money will go back to Mr Abrahams or to his proxy donors.

A Labour Party spokesman said: “We do not give a running commentary on finances. Details are provided in the Electoral Commission’s quarterly report.”