The defending Scottish Premier League champion is facing an unpaid tax bill, which could cost the club upwards of £75 million ($118 million). It is waiting the verdict of a court case to determine the exact amount, but it is clear that the club will not be able to pay Her Majesty's Revenue Customs (the tax man) and other creditors.
Majority shareholder Craig Whyte took over the club in May, but could not meet the club's previous debts. He took responsibility for a club that had unpaid tax bills dating back to 2001, and made the decision to file for bankruptcy.
On the field, the move triggers an automatic 10-point deduction in the Premier League, and effectively hands the 2011-12 title to city rival Celtic FC. Rangers will continue to play its games, although manager Ally McCoist and his players have not been paid since Christmas.
Administrators will oversee the club's entire business operations, which will effect the players and staff. The club will likely sell its highest-paid players, which would likely include American midfielder Maurice Edu.
Former Rangers player and manager Graeme Souness told the Guardian that the club's bankruptcy is a result of its effort to keep up with Celtic and other top European clubs.
"I just think it is a case of chasing the dream, trying to give the supporters what they want and it has all come home to roost, unfortunately," he said.
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