Mayor Jim Boult and Stonewood founder Brent Mettrick are embroiled in a legal battle following the filing of a statement of claim in the High Court at Christchurch.
Details about the claim are scarce, but the High Court only hears civil claims that are complex or for over $350,000.
Queenstown Lakes District Council chief executive Mike Theelen said it was not a council-related matter and did not affect Mr Boult in his capacity as mayor.
''Therefore he won't be standing down and council won't be making any further comment at this time.''
He did not respond to a question about when Mr Boult told the council about the statement of claim, which was filed on July 31.
The plaintiffs are liquidators Rhys Cain and Rees Logan.
Mr Boult said he will ''vigorously defend'' any suggestions he did not fulfil his duties as a director.
Christchurch-based company Stonewood Homes went into receivership on February 22, 2016, owing unsecured creditors $15million.
It was later placed into liquidation. About 110 home buyers were affected by the collapse.
Mr Boult joined the Stonewood board in August 2014.
He stepped down from the company on February 1, 2016, telling media he had done so because he had been part of an attempt to buy Stonewood before receivers were called in and he considered he had a conflict of interest.
Mr Boult said he rejected the claim made by the liquidators.
A court spokesman said there was no date set for the case to be called.
Mr Mettrick also declined to comment.
-By Daisy Hudson
