An emergency meeting of the committee was held on Wednesday night to inform members that charitable trusts and some sponsors listed in Mrs Latham's budget for the 2009 event might not have been approached for funding.
The meeting also dealt with the resignation of acting committee chairman Tim Cadogan.
Ms Latham's company Innerwink was paid $27,939 for managing the 2009 festival.
Repeated attempts by the Otago Daily Times to contact Mrs Latham for comment yesterday were unsuccessful. Her cellphone message said she was on "study leave" until April 19.
Mr Cadogan has stepped down as festival chairman, but remained on the committee.
Ms Higginson, who is also chairwoman of the Vincent Community Board, has been appointed festival chairwoman. She is the third person to chair the committee this year, following the resignation of Steve Battrick in January and Mr Cadogan this week.
The Lakes District and Central Otago News reported yesterday that six trusts listed in Mrs Latham's 2009 budget as "cash planned", totalling $34,000, said they had not received any application for funding for the 2009 festival.
Two Alexandra businesses listed on the budget as a "cash variance" for the 2009 festival had not been approached for sponsorship, they told The News.
Mr Cadogan was reported as saying the information was "absolutely gutting".
"If it turns out that this is correct, we'll have to consider legal action [against Mrs Latham]" he told The News on Wednesday.
The 2009 festival made a loss of $73,143 and owes $80,232 to creditors.
The festival committee was declared technically insolvent earlier this year and a public meeting in the town, to gauge support for the continuation of the event, was followed by the community board agreeing last week to pay the 2009 festival debts.
When approached by the Otago Daily Times yesterday, Mr Cadogan said the revelations about the trusts and sponsorships highlighted his inexperience and that was why he resigned .
"It highlighted for me that I did not have the experience needed for this job. If things had gone wrong, I did not have the knowledge I needed about things like grant applications."
"With such an important community event, we couldn't afford to have any more mistakes. Clair obviously has the expertise and experience needed and I'm firmly behind her."
It was inappropriate for him to make any further comment about the 2009 event management, as Ms Higginson was now the spokeswoman for the committee, he said.
Ms Higginson said, given the committee's current situation, there was no intention of pursuing legal action against the 2009 event manager at this time. However, it remained an option.
"If legal action was pursued, that's a whole bunch of energy and money that would be diverted into that, instead of going into this year's festival.
"The two priorities for us are the people who are owed money - paying them back - and to move forward to the 2010 festival in good heart and with good community support."
The committee was disappointed to learn some of the trusts and sponsors it thought had been asked for funding appeared not to have been approached, she said.
There was no suggestion that any blossom-festival funds had been misappropriated, she said.
Former festival committee chairman Steve Battrick said when contacted yesterday his resignation in January was because of his concerns about Innerwink initially being reappointed event manager for the 2010 festival.
He was uncomfortable about whether Innerwink had met its contractual obligations.
"In view of my concerns, I could not support the event manager being reappointed," he said.
Mr Battrick was unable to elaborate on the details of Innerwink's contract as the specific terms of the contract were confidential.
He made his concerns known before the committee decided to reappoint the event manager, he said.
"In light of the information that is now to hand, it will now be necessary for the new committee to determine whether or not the contractual obligations of Innerwink had been met."
Asked whether, as chairman of the committee, he felt he had a responsibility to oversee the activities of the event manager, Mr Battrick said he did. However, this was reliant on being kept correctly and adequately informed by the event manager.
Leo Hulme resigned as treasurer of the committee at the start of this year and was replaced by Mark Tait. Attempts to contact Mr Hulme yesterday were unsuccessful.
The committee had appointed Martin McPherson as event manager for this year's 54th festival in September. When contacted by the Otago Daily Times yesterday he said he was in "go forward mode - the rest is ancient history".
Other 2010 blossom festival committee members who were able to be contacted by the Otago Daily Times yesterday declined to comment.
THE COMMITTEE
• Clair Higginson (chairwoman)
• Mark Tait (treasurer)
• Chris Heywood (secretary)
• Peter Breen
• Kylie Switalla
• Jill Tosswill
• Robert Cooper
• Tim Cadogan
• Martin McPherson (will soon officially move off the committee and into the role of event manager)
