The board of USA Rugby has voted to file for chapter 11 bankruptcy as a result of "insurmountable financial constraints" in the wake of the coronavirus crisis.
The governing body suspended sanctioned competition and rugby activities indefinitely on March 20 due to the ongoing global pandemic.
According to the United States Courts website, a case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a 'reorganisation' bankruptcy.
USA Rugby will undergo a restructuring process with input from World Rugby, while the country's men's and women's senior national teams will continue to compete as normal when rugby returns.
The governing body described the decision as the best way to "deliver a foundation for future stability".
"Following detailed consultation with legal advisers, the USA Rugby board of directors and Congress voted to officially file Chapter 11 bankruptcy as a result of compounded and insurmountable financial constraints," read a statement.
"The current suspension of sanctioned rugby activities caused by the ongoing Covid-19 pandemic has accelerated the existing financial challenges facing the union, and a reorganisation process will now be progressed with input from World Rugby.
"The USA Rugby board and Congress agree that filing for Chapter 11 bankruptcy supported by a robust action plan, is the optimal strategy in these exceptional circumstances. It is the best platform to swiftly and efficiently address challenges and deliver a foundation for future stability."
The United States' men's team, ranked 16th in the world, lost each of their four Pool C matches at last year's World Cup in Japan, including a 45-7 defeat to finalists England.
USA Rugby chairman Barbara O'Brien said in a statement: "This is the most challenging period this organisation has faced and all resolves were never taken lightly in coming to this determination.
"While the current climate is of course much larger than rugby, we remain focused with stakeholders and supporters in the continued effort toward a balanced rugby community where the game can truly grow."
