Leeds United have revealed they could be forced into administration if talks with their creditors break down.
The troubled Premiership club were hoping to announce a restructuring of their £80m debts following negotiations with their major creditors.
But Leeds have failed to reach a satisfactory conclusion so far with the American bondholders to whom they owe almost £60m, and a Guernsey based finance company who helped fund player purchases to the tune of £21m.
Leeds, who announced a British club record £50m loss for the last financial year, confirmed to the Stock Exchange on Wednesday morning that they "may be forced to seek the protection of an administration order".
That would be a preliminary step to protect themselves from the prospect of creditors attempting to wind the club up.
Leeds, who have caretaker boss Eddie Gray in charge, are bottom of the Premiership.
Their financial plight will almost certainly prevent them from making a move for Southampton manager Gordon Strachan.
Any move for Strachan would mean a compensation payment to the Saints of about £1m.
Relegation from the Premiership, and with it the loss of television income, has already led to forecasts that the club could go out of business.
Leeds' failure to reach agreement with their creditors has forced them to postpone plans to accept a £4.4m cash-for-shares injection from deputy plc chairman Allan Leighton and oil-rich Sheikh Abdul din Mubarak Al-Khalifa.
Designed to rescue companies in financial trouble - or maximise their value
Helps firms to avoid receivership or liquidation
Only courts can order firms to go into administration
The company itself can ask for this, as can creditors
Financial reports etc must prove administration is better than liquidation
Company will be placed under day-to-day control of administrators
A company in administration is protected against its creditors
The statement to the Stock Exchange outlined Leeds' desperate attempts to stay afloat.
It said: "The directors have been negotiating the first phase of a complex debt restructuring of the group's finances with its principal
finance creditors to provide the group with additional working capital and to
give it time to implement a more permanent restructuring plan.
"We also referred to a commitment through a
share issue to inject £4.4m from Allan Leighton and ARM
Holdings Group Ltd.
"Unfortunately, after a long period of constructive discussions, negotiations
have failed to reach a satisfactory conclusion.
"As a result, it has been decided not to go ahead with the planned
subscription for shares.
"Nevertheless, the company continues to be in constructive discussions with a view to providing additional working capital and to give it time to implement a
more permanent restructuring plan.
"But, if the negotiations referred to above are unsuccessful, the directors
may be forced to seek the protection of an administration order."