The famed snapper was given the huge sum to help escape her "dire" financial circumstances but was reportedly expected to sell her entire art collection and homes in Greenwich Village and Rhinebeck, New York, as part of the deal.
Bosses at Art Capital Group have now filed suit at Manhattan Supreme Court for breach of contract, accusing Leibovitz of flouting the terms of the loan.
Lawyers for the company claim she “will not cooperate" in the sale of the artwork and has ignored invoices totalling hundreds of thousands of dollars, according to the New York Daily News.
Leibovitz insists the claims are “false and untrue” and accused Art Capital of “continued harassment and attention-getting efforts”.
In a statement, the photographer's spokesman adds: "For now, her attention remains on her photography and on continuing to organise her finances.".