Worcester Warriors have pulled out of Friday's pre-season game against Glasgow Warriors with the wages of players and staff unpaid this week.
The Premiership club have been served a winding-up petition by HMRC over unpaid tax, believed to be more than £6m.
Worcester are due to begin the new Premiership campaign away to London Irish on 10 September.
The club were also given a £14m loan by the Department for Culture, Media & Sport during the Covid pandemic.
And although a consortium headed by former chief executive Jim O'Toole remain interested in taking over the club from current owners Jason Whittingham and Colin Goldring, their plan would involve the club being placed into administration.
"We express our deep sorrow to our hosts Glasgow Warriors who we hope understand the unique and worrying situation we find ourselves in," a club statement, posted on director of rugby Steve Diamond's Twitter page, read.
"It simply isn't feasible to play when futures remain uncertain and a decision had to be taken today.
"It is unethical for professional players to play a full-on game with the risk of injury and the real possibility of no employment to follow."
The Glasgow squad had already made the trip north to Inverness, where the game was due to be played.
"Although we are disappointed by this outcome, we recognise the challenging situation Worcester currently find themselves in and wish them well," the club said in a statement.