Former York Wasps coaches Dean Robinson and John Paterson could end up with nothing if the Company Voluntary Arrangement gets the go-ahead.
The pair are due more than £17,000 between them in compensation after winning their claim for constructive dismissal.
The Wasps claim they are insured but the insurance company are refusing to pay-up, claiming the coaches' grievances began before the policy was taken out.
It was that revelation which finally prompted John Stabler and Russell Greenfield to seek a Company Voluntary Arrangement.
Greenfield remains confident the club are insured and is still hopeful the insurance company will have to pay out.
However, the parties met last night and were still unable to reach an agreement.
If the club are left to meet the debt, the CVA could mean the pair never receive their cash.
They are not classed as preferential creditors so would therefore have to wait and see what, if any, of the money the club are forced to pay out.
The amount would be determined by the corporate recovery experts.
The problem of the compensation payment, coupled with difficulties in keeping up with Inland Revenue repayments, proved the final straw for the club.
Speaking of their decision, Greenfield said: "When we found out the insurance company weren't paying I had a look at the books and decided we should see an insolvency expert.
"We weren't able to pay the creditors and we would fall further and further behind. Therefore the only course of action was to do something about it. We had to close it or attempt for a CVA."
* Don't miss tomorrow's Evening Press for the latest on the Wasps financial crisis and the preview to Sunday's home game with Keighley.
dianne.hillaby@ycp.co.uk
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