London Welsh Rugby Football Club has confirmed it will seek voluntary liquidation because of an “unsustainable” financial situation.
The club were issued with a second winding-up petition by HM Revenue & Customs in October and did not receive investment.
London Welsh, which was founded in 1885, hopes to reappear as a semi-professional side next year – still playing at their current ground Old Deer Park.
The Exiles will need to raise £300,000 so that the club can regain a position within the RFU Greene King IPA Championship.
Chairman Gareth Hawkins said the club’s current business model is “totally unsustainable” due to a playing budget of £1.7m and seeing turnouts as low as 400.
He said: “London Welsh has reached a difficult point in its illustrious history.
“The debts accrued from trading in this way have left the Club with no alternative but to seek liquidation.
“Having to break that news to 40 staff members yesterday was extremely difficult.
“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.
“However, it will first be necessary to change the Club’s business model to a semi-professional set-up and form a new company.”
Doncaster are due to play the club in the British and Irish Cup this Saturday, but it has not being confirmed if the fixture will go ahead.
The Exiles spent three seasons at the Kassam Stadium in Oxford between 2012/13 and 2014/15.
The team was promoted to the Premiership in 2011/12, relegated and then promoted again at the end of the 2013/14 season.
They were relegated in 2014/15, having lost all 22 games.
London Welsh returned to their traditional Richmond home of Old Deer Park in 2015.