Ungaro's chairman is desperate to axe Lindsay Lohan's contract with the label.
The “Mean Girls” actress' debut collection for the French fashion house was a critical flop and her continued association with the brand has caused an all-out battle between chairman Asim Abdullah and CEO Mounir Moufarrige.
A source told the New York Post: "Asim wants her out now. Department stores in the States have already told him they won't be picking up the line if Lohan remains a collaborator, so it's a serious issue.
"Mounir wants to keep her on because it was his idea to hire her in the first place. He's trying to save face."
Earlier this month, Emanuel Ungaro, who has had no contact with the fashion house since his 2005 departure, blasted the Irish-American starlet’s collection.
"I am furious, but I can't do anything about it,” he said. “It is in the process of losing its soul."
A spokesperson for Ungaro's chairman denied any rift between him and Mounir. The representative said: "Such an insinuation is totally absurd."