LIV Golf has filed for bankruptcy protection as it attempts to restructure after Saudi Arabia withdrew its multibillion-dollar funding - a move that means all its players will have the option to leave.
A Chapter 11 petition, which LIV says is to "preserve the company's business", was filed in the United States on Tuesday.
The breakaway league says it has found a new investor in BC Partners, following the decision in April by Saudi Arabia's Public Investment Fund (PIF) to pull its funding.
LIV Golf intends to commence its new majority player-owned league early next year and it is understood the Chapter 11 process allows it to start talking to players about their participation in LIV's future.
BBC Sport understands there is no obligation on players to sign on to LIV 2.0, regardless of whether they had previously signed multi-year contracts with LIV Golf.
Sources have said contracts under the previous iteration of LIV Golf will finish because of this court filing, with amounts owed to players and other creditors addressed through the court process.
However, it remains unclear when players would then be able to enter discussions with other tours.
Documents in the petition outline money owed to LIV Golf's top 30 creditors. Two-time major winner Jon Rahm tops that list with an unsecured claim of $7.5m (£5.5m).
Since LIV's controversial launch in 2021, more than $5bn (£3.7bn) has been spent by PIF, with major winners including Rahm and Bryson DeChambeau lured by lucrative contracts and vast prize money.
However, the future of the concept - and its star players - has been shrouded in uncertainty, with the 2026 season having ended early.
LIV Golf chief executive Scott O'Neil told the BBC at the final event in Indianapolis last month he had "high levels of confidence" in achieving a "critical mass" of players to make the new league a reality.
DeChambeau said at the conclusion of that event he felt there was "a lot of potential moving forward" and he believed there was "something fun coming".
Speaking on Tuesday before this week's Irish Open, Rahm was tight-lipped when pressed on his future.
Asked if he knew what the coming months held, he told BBC Sport: "Yes and no. It hasn't really changed from my last interview in Indianapolis.
There's just a lot of things in place, right? There's a lot of things that could happen and it's one of those things where time's gonna tell."
Rahm added: "I still have a contract with LIV 1.0 that I'm more than willing to fulfil, so like I said, time will tell."
The bankruptcy filing was made in the federal district court of New Jersey, where LIV Golf set up a subsidiary earlier in the summer.
Chapter 11 protection postpones a US company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business.
PIF is providing a bankruptcy loan of $49.6m (£36.6m) - called 'debtor in possession' (DIP) financing - to help fund the process.
When announcing its decision to withdraw funding, PIF said the "substantial investment required by LIV Golf over a longer term" was "no longer consistent" with its strategy.
Despite its decision to stop bankrolling LIV Golf, PIF added it "remains committed" to its "substantial current and future investments in various sports as a priority sector".
On Tuesday, LIV confirmed international investment firm BC Partners as its proposed new investor in a letter to fans outlining its "next phase".
"LIV Golf has entered a court-supervised restructuring process that provides us with the time and framework to address previous financial obligations and complete a transaction that will make the league's next phase a reality," said the letter.
"Put simply, this process is designed to build a stronger and more sustainable future for LIV Golf."
O'Neil added in a statement: "This process gives us the structure and time to pursue a landmark transaction and begin the next chapter of LIV Golf - one built around the fans, an innovative, player-first ownership model, and a part of the global golf ecosystem."
In yet another indication the free-spending days of LIV 1.0 are over, the letter said the new league would be "built around a sustainable business model".
Players are set to be given equity and individual commercial rights are set to be returned to players, giving them greater earning potential. In terms of prize money, LIV Golf purses are set to be lower than events on the PGA Tour - which has risen in part because of the existence of LIV - but higher than events on the DP World Tour.
The letter also outlined proposed changes, with field sizes expanding to 75 players, the introduction of a cut, creating qualifiers and having more teams that "embrace national identities", with the ambitions for teams to "grow into enduring global sports businesses".
