The Confederation of British Industry (CBI) is reportedly at risk of insolvency, leaving the scandal-hit business lobby group facing a race against time to restructure its finances or secure a merger with the manufacturers’ trade body Make UK. Britain’s largest corporate lobbying organisation has been in discussions with Make UK about a tie-up, in an unexpected twist to its battle to recover from sexual misconduct allegations revealed by the Guardian. But on Friday morning it emerged that the CBI’s pension scheme may be an obstacle to a deal that could help the CBI repair finances damaged by the flood of businesses that cancelled or suspended their memberships after the claims surfaced. Further reports on Friday evening suggested the group was within weeks of running out of cash, with one source telling Sky News that insolvency was “definitely a risk”, because of uncertainty over whether companies would rejoin its ranks. The Guardian has approached the CBI for comment. The organisation has said that it sought advice on restructuring in order to be “responsible” but has yet to comment on reports that it is facing an urgent cash crunch. Much could depend on its ability to secure a tie-up with Make UK and the extent to which the pension scheme proves to be a hurdle in sealing the deal. The pension scheme is in surplus but will have to be hived off, probably to an insurance company, according to the Financial Times, which first reported on the stumbling block. The CBI is understood to be yet to find an insurer willing to take on the scheme’s liabilities. “It’s not that there’s a problem with the regulator, it’s just that these things take time and the CBI doesn’t have time,” someone close to the talks told the FT. The CBI and Make UK have said “positive and constructive” merger talks have taken place and are at an initial stage. The CBI is under pressure to find a solution in short order, given the pressure on its finances caused by the membership exodus. It is unclear whether it would retain the CBI brand, described as “broken beyond repair” by one business leader earlier this year, after any tie-up with Make UK. Rain Newton-Smith, who took over as director general in April and is overseeing an overhaul of the group’s governance, has said a rebranding would be a necessary part of attempts to rebuild trust. The CBI was plunged into crisis by reports in the Guardian about alleged sexual misconduct, which led to a police investigation. Allegations included a claim of rape at a staff party. Dozens of companies paused or cancelled their CBI membership in light of the allegations, and the lobby group found itself frozen out of industry meetings with government, and had to quit a corporate diversity initiative earlier than planned.