Championship club London Welsh are set to go into liquidation because of an “unsustainable” financial situation.
They were issued with a second winding-up petition by HM Revenue & Customs in October and they did not receive proposed investment.
London Welsh now hope to reform as a semi-professional side in 2017, playing at their current Old Deer Park ground.
“Having to break the news to 40 staff members was extremely difficult,” chairman Gareth Hawkins said.
“Due to a playing budget of £1.7m and gates at games numbering as low as 400, the club’s current business model is totally unsustainable.”
London Welsh are due to play Doncaster in the British and Irish Cup on Saturday, but it is not yet known if the fixture will go ahead.
The club had a winding-up petition dismissed in September after agreeing a takeover with a United States-based investment group, but the deal was never completed.
The Exiles were in the Premiership as recently as the 2014-15 season, when they were based at the Kassam Stadium in Oxford – but were relegated after losing all 22 matches.
“In the New Year, it is the hope and intention of the board that London Welsh will be able to return to playing at Old Deer Park,” added Hawkins.
“However, it will first be necessary to change the club’s business model to a semi-professional set-up and form a new company, and then raise £300,000 so that the club can regain a position within the Championship.”
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