The Scottish Rugby Union is threatening to close down Edinburgh, according to the club's owner Bob Carruthers.
Edinburgh owner Bob Carruthers is at odds with the SRU
He told BBC Scotland the SRU's chief executive Gordon McKie will pull the plug on funding if Edinburgh goes ahead with court action against the Union.
Carruthers says the SRU owes Edinburgh a six-figure sum in promised revenue, a claim rejected by the governing body.
"They have defaulted constantly," said Carruthers, who is contemplating court action to recover the funds.
The SRU, who have now reported Edinburgh to the International Rugby Board in a dispute over releasing players for Scotland duty, responded with a brief statement.
It said they had "fully complied with the terms of its contract with Edinburgh Rugby Limited at all times".
And added that the SRU were "dismayed that Edinburgh Rugby continues to make unfounded allegations".
Carruthers, who took control of the club just under a year ago, told BBC Scotland that the SRU were behaving like playground bullies.
"When we bought this club a year ago we got a very clear agreement drawn up by two sets of respected lawyers that committed the SRU to provide certain funding," he said.
The chairman and chief executive are just worn out - they have tried for a year and fought to keep it out of court
"We can't get the board of the SRU to agree to meet with us and Gordon McKie's stance is if we try to assert rights through the courts he will try to close Edinburgh Rugby.
"He will invoke Scottish Rugby by-laws and IRB regulations to prevent the club from playing fixtures. It is not mature and not sensible. After a year we still haven't met the board.
"The chairman and chief executive are just worn out. They have tried for a year and fought to keep it out of court."
Edinburgh chairman Alex Carruthers and managing director Graham Stirling resigned from their posts amid the ongoing row.
A crisis meeting on Wednesday failed to resolve the issues, which centred on Magners League and Heineken Cup fees.
Court action could commence within three to four weeks.
Edinburgh ordered 12 players from Scotland's World Cup training squad to return to the club while talks were being held.
On this issue, SRU secretary Graham Ireland said: "We have now written to Edinburgh Rugby on two occasions, reminding them of their obligations to release players for Scotland duty in line with the IRB's requirements.
"Regrettably we have now been forced to refer the matter to the independent disciplinary body for consideration. It is now out of our hands.
"The Disciplinary Panel will independently determine the rights and wrongs of this case and sanction Edinburgh Rugby appropriately.
"It is a great pity that we have had to resort to this in order to protect the interests of the Edinburgh players selected for the Scotland training camp and to give our national team its best chance for success in the World Cup, which begins in September."
However, Carruthers insists Edinburgh have not broken any promises and the players will return to the international squad on 13 July.
"We are not withholding the Scotland players," he said.
"There is a very, very clear agreement signed by two sets of lawyers which sets out when the players have to be released."