Labour leader Andrew Little has been given a week to retract comments he made about the management of a Niuean resort, or face defamation charges.
The founder of the Scenic Hotel Group, Earl Hagaman, said in a statement this morning that Mr Little has until 5pm on May 20 to apologise and issue a full retraction.
Mr Little has criticised the tender process that lead to Scenic Hotels being given a Government contract to manage Matavai Resort.
In mid-April, Labour requested the Auditor General look into the appointment after it was found Mr Hagaman had donated $101,000 to National a month before the contract was announced in 2014.
Mr Hagaman's wife, Lani Hagaman, says those allegations were entirely "false and defamatory," which is why the couple sought legal advice.
"We are asking for a full retraction and apology because no one should be verbally attacked and denigrated because they believe in democracy and the right to make their own unsolicited political choice on who they want to give a donation to.
"The decision to make the donation was completely unsolicited and was Earl's personal decision and nothing to do with the Scenic Hotel business," she says.
Ms Hagaman also accused Mr Little of using his Parliamentary role to attack their business.
"The position Andrew Little holds is one of power and privilege. It should be a privilege to be elected into Parliament and work hard for the people of New Zealand, rather than to cast unjustifiable slurs on people because they have made a donation to the party of his prime political opponent."
Since news of the defamation threat, Mr Little has responded by saying he too is exploring his options after only receiving a letter from the Hagaman's lawyer this morning -- the same time the media release was sent out.
"I am presently considering the issue and taking advice. I will not be restrained from undertaking my constitutional role of calling the government of the day to account."
The Hagamans would not comment further on the issue.