Worcester Warriors players and staff are to have their contracts terminated, following part of the club being wound up in the High Court.
HMRC had been pursuing Worcester, who are suspended from all competitions, for unpaid tax of around £6m.
Judge Nicholas Briggs instructed that WRFC Players Ltd, through which players and staff are paid, should be wound up.
A winding-up petition against WRFC Trading Limited, which remains in administration, has been suspended.
The four players who went out on loan to Bath on Monday and the rest of the squad are now free agents so can sign for any club.
The joint hearing for both companies, held at the Royal Courts of Justice in London, was relayed online as a result of the train strike and the club had no representation in court.
‘Warriors have ended up like the Titanic’
“This is the darkest day for English rugby,” said Warriors director of rugby Steve Diamond. “We thought we could turn the tanker around but it’s ended up like the Titanic, sadly. The ship has sunk, the captains are nowhere to be seen.”
All debts at WRFC Players Ltd, including the sum owed to HMRC, believed to be over £6m, remain outstanding.
The club also owe a reported £15m, understood to be the largest share, as part of the combined £124m loaned out to Premiership clubs by the Department for Culture, Media and Sport during the height of the Covid pandemic as sports survival payments.
The ground and the club are controlled by WRFC Trading Ltd, which went into administration last Monday.
Much of the land around the ground now belongs to other companies owned by co-owners Jason Whittingham and Colin Goldring.
Begbies Traynor, the administrators appointed to deal with the WRFC Trading Ltd wing of the club, will continue to deal with that part of the process.
But the contracts of all players, backroom staff, administrative staff, and the women’s squad, who play under the University of Worcester Warriors banner, are all effectively terminated.
Some staff are still owed 35% of their August wages, while some did not get paid at all, and nobody was paid for September.
It is understood Warriors could now have their suspension from the Premiership and other competitions extended until the end of season – and suffer relegation to the Championship.
But, if a buyer is found by the middle of this month, they could still save their place in the Premiership.
Begbies Traynor are still seeking a buyer for WRFC Trading Ltd – and are talking to two consortiums, one of which is a consortium led by former Warriors chief executive Jim O’Toole.
Warriors’ tale of woe
Players treated like ‘pieces of meat’ – Neild
Warriors summer signing Cameron Neild told BBC Sport that Warriors’ financial problems cannot all be blamed on the Coronavirus pandemic.
“The pandemic has had a part to play,” he said. “Right across all sports the numbers decreased dramatically, in terms of people having to borrow money like Worcester did.
“It’s not an ideal situation for the club, or anyone to be in, but it’s about how you fight back from that and the ownership of Worcester has done that terribly.
“I couldn’t describe it as anything other than a shambles. The way the owners have treated players, staff as if they’re pieces of meat.
“I’m glad I don’t have to speak or hear from them again. My agent is out there at the moment looking for a club.
“No deal has been able to be done yet. There’s now 50 players out there, and there’s also staff as well.”
How did Warriors come to this?
Worcester began their journey to try to become a force in English club rugby when local millionaire boiler manufacturer Cecil Duckworth first got involved in 1997.
He injected the funds which led to a first promotion to the Premiership under coach John Brain in 2004.
But Warriors have never really kicked on from there, have twice been relegated, and have never finished higher than eighth in their 16 years in the top flight.
Long-time benefactor Duckworth reduced his involvement in 2013, when Sixways Holdings Limited took over, under Greg Allen.
Duckworth remained part of the new board as club president, until his death in 2020.
By then, the club had been sold again, to a four-man consortium fronted by Jed McCrory in October 2018, but he left in June 2019, leaving Whittingham and Goldring, who were also directors of EFL club Morecambe, at the helm as joint owners.