The Rebels went into voluntary administration in January with Rugby Australia (RA) taking over their competition licence and covering player and staff payments until the end of this season.
RA is still working through a decision on whether to wind it up, but PwC administrator Stephen Longley has recommended in a report released on Wednesday that creditors accept a proposal from directors to save the club.
Rebels directors have proposed a deed of company arrangement (DOCA) which would guarantee employees 100 per cent of their entitlements, but leave unsecured creditors with as little as 15 cents to the dollar.
Longley said the directors' deal was preferable to liquidation given litigation costs could leave creditors with as little as nine cents.
"I am of the view that the likely return to creditors under the proposed deed will provide a materially better outcome for creditors than a winding up," Longley wrote.
The club's liabilities were detailed in the report, with unsecured creditors and related parties claiming nearly $22 million out of total claims of more than $23 million.
The unsecured creditors include the Australian Taxation Office, which is claiming more than $11 million, and the Melbourne and Olympic Parks Trust ($1.14m) which runs the Rebels' home ground, AAMI Park.
The report revealed in the last three calendar years, the Rebels incurred operating losses of $5.7 million (2023), $5.3 million (2022) and $5 million (2021).
"My preliminary view is that the company may have traded whilst insolvent from 31 December 2018, and that it is likely that all debts that remain unpaid were incurred which could result in an insolvent trading claim exceeding $16.8m," Longley concluded in the report.
The deal will be put to creditors, which includes RA, at a meeting on May 3.
While the directors alleged a shortfall in RA funding contributed to the club's dire financial state, the governing body pointed to the report findings that pointed the blame elsewhere.
"RA notes Section 7.2 of the report specifically states that MRRU's (Melbourne Rebels Rugby Union's) financial difficulties are not due to RA's lack of funding, but rather MRRU's trading losses, lack of alternative funding, excessive costs and insufficient non-RA revenues," RA said in a statement issued late Thursday.
RA said it had complied with all its contractual obligations to the club MRRU and alleged the Rebels "misused" funds that were intended to be paid to the Australian Tax Office.
RA claimed despite multiple requests Rebels directors had failed to provide a viable proposal of business plan for the club's future.
Head office said it remained committed to rugby in Victoria and would continue to work with stakeholders as well as legal and financial advisors regarding the next step.
Despite the financial turmoil, the Rebels are having their most successful season since joining the competition in 2011, currently sitting fourth on the ladder.
They face the last-placed Crusaders in Christchurch on Friday.
