Worcester Warriors players and staff face having 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, since August for unpaid taxes.
Judge Nicholas Briggs instructed that WRFC Players Ltd, through which players and staff are paid - is wound up.
A winding-up petition against WRFC Trading Limited - which remains in administration - has been suspended.
All debts at WRFC Players Ltd, which had no representation in court, remain outstanding.
The ground and the club are under WRFC Trading Ltd, which went into administration last Monday.
But 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.
The four players who went out on loan to Bath on Monday are now free agents so can sign for any club.
Some staff are still owed 35% of their August wages, while 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.
More to follow.
