Modahl is suing BAF, placed in administration last October with debts of around pounds 2m, after successfully fighting a four-year ban for "failing" a drugs test and being sent home from the 1994 Commonwealth Games.
The 32-year-old, who had to sell her Sale home to fund the long-running legal battle, is suing for pounds 800,000, although her lawyers have been negotiating with the Federation's administrators to reach a settlement.
The administrators cannot pay other creditors until agreement with Modahl, who competed in the 800m for Britain at the European Championships in Budapest, is reached.
"The administrators have a clear choice," Modahl's statement said. "Either they persuade the other creditors to fund the legal costs of fighting the case to trial, or they continue discussions with us with a view to resolving all outstanding issues.
"The sensible outcome would be for the administration to be completed and for all the creditors to receive a distribution."
Modahl stressed that she wants to reach an out-of-court settlement as soon as possible.
"I am prepared to compromise but the ball is not in my court," she said. "I have almost been too nice with the administrators, too welcoming and too prepared to say `let's go forward'. You have to remember it was me who was wronged. It was me who was shamed. It was me who was sent home from the Commonwealth Games and me who was not allowed to defend my title."
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