Torquay United could go out of business if some of the club's former employees win court cases against the club, director of football Dean Edwards says.
The Gulls were taken over by a consortium of local business people in the summer, but laid off a number of staff as they tried to cut costs.
"We have a couple of people now who are trying to take us to court," Edwards told BBC Sport.
"It's a problem for us. Ultimately it could finish the football club."
One person has already won a case for unfair dismissal against the National League club, who could face a bill of up to £250,000 if all the cases went against the Gulls.
"I understand their situation," Edwards added. "They felt they've probably been wronged and they have every right to do it, and if I was honest I'd probably do it myself, but this is where we are.
"But it's a problem that gives the club not much time to put things right, because if it does go the proverbial pear-shaped, the club could be closed down."
Torquay almost folded in the summer after lottery-winning chairman Thea Bristow decided to leave, with Edwards part of the consortium that took over with a vastly reduced budget.
Edwards says those financial constraints should not be held as an excuse for the club's current league position of 19th.
He continued: "Woking's budget is very similar to ours and look where they are in the table [third].
"What we really need is some experienced non-league players who really know this league and can get us to a stage where we can get more fans through the gate.
"We've got to try to get these players who are experienced, but that's where we have a problem because they're looking at the high end of our budget and we've already got high-end players.
"You couldn't account for [midfielder] Luke Young injuring his cruciate knee ligament, which has put him out for the season. [Striker] Waide Fairhurst has an injury and he's another high earner.
"We've had a bit of bad luck in the fact that we have got those players."