Worcester Warriors players and staff are to have their contracts terminated, following part of the club being wound up in the High Court.
HMRC had been pursuing the club, who are suspended from all competitions, for unpaid tax of around £6m.
Judge Nicholas Briggs instructed that WRFC Players Ltd, through which players and staff are paid, should be wound up.
A winding-up petition against WRFC Trading Limited, which remains in administration, has been suspended.
The four players who went out on loan to Bath on Monday and the rest of the squad are now free agents so can sign for any club.
The joint hearing for both companies, held at the Royal Courts of Justice in London, was relayed online as a result of the train strike.
The club had no representation in court.
All debts at WRFC Players Ltd, including the sum owed to HMRC, believed to be over £6m, remain outstanding.
The ground and the club are controlled by WRFC Trading Ltd, which went into administration last Monday.
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.
Some staff are still owed 35% of their August wages, while some did not get paid at all, and 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.
But, if a buyer is found by the middle of this month, they could still save their place in the Premiership.
Begbies Traynor are still seeking a buyer for WRFC Trading Ltd - and are talking to two consortiums, one of which is a consortium led by former Warriors chief executive Jim O'Toole.
Warriors' tale of woe
How did Warriors come to this?
Worcester began their journey to try to become a force in English club rugby when local millionaire boiler manufacturer Cecil Duckworth first got involved in 1997.
He injected the funds which led to a first promotion to the Premiership under coach John Brain in 2004.
But Warriors have never really kicked on from there, have twice been relegated, and have never finished higher than eighth in their 16 years in the top flight.
Long-time benefactor Duckworth reduced his involvement in 2013, when Sixways Holdings Limited took over, under Greg Allen.
Duckworth remained part of the new board as club president, until his death in 2020.
By then, the club had been sold again, to a four-man consortium fronted by Jed McCrory in October 2018, but he left in June 2019, leaving Whittingham and Goldring, who were also directors of EFL club Morecambe, at the helm as joint owners.
Source: BBC Rugby Union News