Rangers appear set to be liquidated and re-formed as a newco after Her Majesty's Revenue and Customs decided to vote against a Company Voluntary Arrangement put forward by the prospective new owners.
Buyer Charles Green has been informed that HMRC - the most significant of the club's creditors, owed more than £21 million - will not accept a CVA, which would see a small percentage of the money repaid as a compromise arrangement.
As a result of HMRC's decision, Green - who leads the Sevco consortium hoping to buy the club - will press ahead with his plans to purchase the club's assets and form a new company.
Green said in a statement: "I am hugely disappointed by the decision of HMRC not to support the CVA proposal and that disappointment will be felt acutely by Rangers fans across the world."
HMRC has said that it will pursue individuals for the money owed in the belief that it stands a greater chance of receiving the funds it is due.
A statement from the tax authority read: "A liquidation provides the best opportunity to protect taxpayers, by allowing the potential investigation and pursuit of possible claims against those responsible for the company's financial affairs in recent years.
"A CVA would restrict the scope of such action. Moreover, the liquidation route does not prejudice the proposed sale of the club. This sale can take place either through a CVA or a liquidation, so the sale is not being undermined, it simply takes a different route.
"Liquidation will enable a sale of the football assets to be made to a new company, thereby ensuring that football will continue at Ibrox. It also means that the new company will be free from claims or litigation in a way which would not be achievable with a CVA.
"Rangers can make a fresh start."
Rangers' administrators, Duff and Phelps, said in a statement that a "binding" sale and purchase agreement with Green would now come into effect.
Joint administrator Paul Clark said: "As we have always stated, administrators have a primary objective to ensure the survival of the company and in this case, this would have been achieved through a CVA. It was with HMRC's approval that a proposal was placed before creditors for consideration.
"However, it is the commercial view that the level offered within the CVA was not enough to merit departure from their normal policy of seeking a detailed investigation via a liquidator.
"However, we have been left in no doubt by HMRC the fundamental reason for the rejection of the CVA proposal is the historical non-compliance with tax liabilities by the former owners and directors of the club."
Clark said Green's consortium will move to acquire the club's assets immediately after the formal rejection of the CVA proposal at a creditors' meeting at Ibrox on Thursday morning.
"That transaction will be completed within a few days," Clark added. "The sum payable to creditors will be £5.5 million, most of which has already been paid over to us by the Green consortium.
"Over the coming months, we as administrators will continue to finalise the administration of the club and we will work in conjunction with BDO, who will undertake the liquidation process. While the club will continue to face difficulties in the short term, it will survive and continue to play at Ibrox."