The private company running Bradford Festival today threatened legal action against the city Council.

The Bradford International Festival Company claims the Council delayed confirmation of its contract and failed to release funds so bills could be paid.

The company's allegations came as councillors prepared to consider terminating its contracts after the accounts showed it had run up debts of £192,000. The company also owes a substantial sum to creditors and has asked the Council to advance part of its £328,000 annual grant to help pay them.

But Council lawyers believe the company has breached its contract by allowing the debts to worsen. Members will decide whether the deal should continue at emergency meetings of the regeneration and culture scrutiny and executive committees tomorrow.

A campaign has already being started by people who want the festival put into the hands of a charitable trust.

Members were meeting tonight to discuss the crisis which could leave the city without an event next year.

But a spokesman for the Bradford International Fest-ival Company said today: "The only crisis at the festival has been caused by the Council's delay in confirming our third year contract and making funds available.

"The festival company has raised more than £1 million of new money to develop the festival during the course of its three-year contract. The Council's delay in confirming our contract threatens the £500,000 of funding in place for 2004. It also threatens the future of the festival."

The spokesman said a deficit in its first year of trading had been planned and agreed with former Council chief executive Ian Stewart. But profits were made in the second year and there was a "robust business plan" in place to remove the deficit and produce an excellent festival next year.

He said directors had not accepted 70 per cent of their fees in 2002 and this year, and brought in large amounts of their own funds to ease the cash-flow problem while the Council made up its mind.

He said the event brought employment to 800 people and supported Bradford's cultural industries during the year.

"The people of Bradford and the livelihoods of ourselves and our suppliers deserve better than having their festival treated as a political football," said its spokesman. "The festival company has requested the Council honour its contract that fell due in September. It is not requesting additional funds.

"However, it is requesting that the city supports the festival by making elements of its grant available at the beginning of the year to smooth out the company cash flow while they await its staggered payments.

"The festival organisers and its suppliers are enduring considerable financial hardship while they await the Council's decision to honour its contract.

"If they fail to do so, the festival will immediately initiate legal action."

But the Council's executive member for the environment - including culture - Councillor Anne Hawkesworth said: "There is no dispute. The festival accounts show a substantial deficit and we have a responsibility to the council tax payers and residents.

"We are taking advice from our lawyers."

Former festival director Coun Mark Fielding (Lab, Heaton) said: "The festival should be taken from private hands and put back into the Council's control straightaway.