Newcastle Now says it will continue to exist next year despite Newcastle City Council terminating its agreement with the business group.
Chairman Edward Duc said in a radio interview last week that the group planned to fold, but its board has since resolved to keep operating.
The council said last week that it would terminate its funding deed with Newcastle Now on December 31 and with the city's four other "business improvement associations" (BIAs) on June 30.
The BIAs will be able to enter into new funding deeds but will not be able to request money from a special levy on commercial ratepayers for administration or salaries.
Newcastle Now said in a statement that it would continue to operate and deliver projects in train until the end of January.
“The board has met since I made comments in the media about wrapping up and has resolved to maintain the organisation and keep working for the benefit of the city,” Mr Duc said.
“The association is an entity in its own right and still has a functioning board, as we are all volunteers.
“It is our expectation that the executive manager, Richard Christian, will stay on with the association into 2019 to ensure a smooth administrative transition and the delivery of existing projects.”
The council said in a statement last week that the BIAs had been spending too much on staff and administration costs.
But, in Newcastle Now's case, council chief executive officer Jeremy Bath said this had occurred before Mr Christian joined the organisation in May.
Mr Christian said the "allegations levelled at Newcastle Now relate to events before my time".
"I’ve tried very hard since my appointment to strengthen relationships with our stakeholders and to improve administrative processes within the organisation," he said.
“I’m looking forward to working with the council and the board to improve the way the special rate funds are used to support and revitalise the city centre.”
Mr Bath said last week that payments to Newcastle Now had “not been supported by business plans submitted by Newcastle Now” and it had “failed to meet standards of acquittal for projects since 2016 and inappropriately used the special rate levy funds for projects”.
Mr Christian said on Sunday that the alleged breaches related to events before his appointment, but “all funds spent in the last seven years have been recorded and reconciled in MYOB with a job or project number”.
Mr Duc rejected accusations in a termination letter sent by Mr Bath that Newcastle Now had not held funds “on trust” for the council, as per the funding deed.
“Special rate funds are held in a bank account approved by council that’s consistent with our obligations under the deed and, as our constitution and annual report states, these funds are clearly held ‘on trust for council’,” he said on Sunday.
Sign up for our newsletter to stay up to date.