The Victorian Liberals look likely to begin 2018 locked in a courtroom battle for control of a $70 million pot of electoral funding.
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The party says it will go to court after trying for more than a year to resolve its dispute with the Melbourne businessmen who control the Cormack Foundation, which has bankrolled the state Liberals since the 1980s.
The foundation's eight directors include Rupert Murdoch's brother-in-law John Calvert-Jones, former Reserve Bank board member and Business Council of Australia president Hugh Morgan and former ANZ chairman Charles Goode.
The Age understands that action will be launched in the Federal Court this week, an outcome that many Liberals wanted to avoid.
The row, described as a "family argument", is over ownership of the $70 million investment fund, which was founded with the proceeds from the sale of Liberal-owned radio station 3XY in 1988.
The party says it owns the money but the foundation's directors disagree, saying they are free to donate it to "libertarian causes" as they see fit.
Liberal officials also fear Labor's proposed electoral funding reforms might see them cut off from the Cormack money forever if the Andrews' government forces through its legislation before the dispute is settled.
A deadline, imposed by the party for the foundation to agree to binding arbitration, expired on Tuesday and a senior Liberal official said the foundation can expect action to be launched in the Federal Court as early as Wednesday.
A Cormack Foundation spokesman declined to comment on Tuesday, but it is understood that the directors' position of rejecting "unrealistic deadlines" has not changed.
The foundation's company secretary Peter Matthey told party members last week that the foundation wanted to keep the dispute out of the courts.
"Litigation is the least preferred option because of its open-ended expense and the public nature of its processes," he wrote.
"[But] in practical terms, to impose unrealistic deadlines for arbitration is to kill the option altogether," he wrote.
Liberal state director Nick Demiris wrote to the foundation on Friday asking that the dispute be "resolved quickly" and outlining some of party's grievances.
Liberal officials accuse the foundation directors of consorting with enemies of the party by meeting with a senior Andrews government minister, and of financing non-Liberal candidates in the 2016 federal election who were "trying to defeat the Turnbull government".
But it is understood Mr Demiris' letter has done nothing to shift sentiment among the foundation's directors.
Party figures insist the Liberals can pay for their state election campaign regardless – with the poll due in November 2018 – by drawing down on investments and using equity in their party headquarters building in Melbourne's CBD.
