Edinburgh executive chairman Alex Carruthers and managing director Graeme Stirling have resigned amid a bitter row with the Scottish Rugby Union.
Scotland wing Chris Paterson is one of those caught up in the dispute
Edinburgh have withdrawn 12 players from Scotland's World Cup training squad until a wrangle over Magners League and Heineken Cup fees ends.
A Wednesday crisis meeting failed to reach agreement, leaving coach Frank Hadden's preparations in disarray.
Carruthers, angry at the SRU, said: "We can't accept what's going on."
Leading players such as Chris Paterson, Mike Blair, Ali Hogg and Scott Murray have been training with their club while the talks were held.
Relationships between Edinburgh and the SRU have been strained after a consortium fronted by Carruthers and his brother, Bob, franchised the club.
We got into this because we wanted to run a successful rugby team, but we are being prevented from doing that by the SRU
Former Edinburgh chairman Alex Carruthers
And the departing chairman is disappointed at the way the SRU has been conducting its business.
"We've given it our best shot and we're walking away with our reputations still intact," he said.
"But we're absolutely disgusted at the way we have been handled by the SRU. It is a very sad and disappointing day.
"We got into this because we wanted to run a successful rugby team, but we are being prevented from doing that by the SRU and it is time to walk away."
However, he insisted that his brother would continue to press Edinburgh's case.
A number of issues - such as the distribution of revenues and the failure of the SRU to consult Edinburgh on their decision to close the Border Reivers - have sparked major public spats.
Now the row over distribution of appearance fees has widened the gulf.
An Edinburgh spokesperson had said earlier: "It's in the hands of our legal team. They are advising us and there is nothing to say until that happens.
"We're trying to work to a satisfactory resolution, but Edinburgh's international players will be training with the club until that happens."
The SRU were equally tight-lipped, stating only that the meeting had been unsatisfactory and confirming that they might look into invoking IRB regulation nine.
Regulation nine states that: "A Union has first and last call upon the availability of a player for selection and appearances for a national representative team or national squad of that union and all attendances associated therewith, including training sessions."