The Blue Knights have withdrawn their bid to buy Rangers, former Ibrox director Paul Murray told a press conference after weeks of negotiations.
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Rangers manager Ally McCoist had earlier said that administrators had told him they were "very close" to naming a preferred bidder.
Sale Sharks owner Brian Kennedy later valued their final bid at £11million and revealed they had lined up former managers Walter Smith and Graeme Souness to join a football board of the club.
The Knights were offered preferred bidder status several weeks ago, but potential partners Ticketus would not pay the £500,000 exclusivity fee.
After joining with Kennedy and without Ticketus, the consortium was then beaten to preferred bidder status by American Bill Miller, who subsequently withdrew.
Kennedy last night issued a noon ultimatum to administrators Duff and Phelps, but the race to assume control appears to have been won by a consortium with previous experience of running football clubs in England.
Murray explained they felt they had no option but to withdraw after fearing their chances of securing a Company Voluntary Arrangement (CVA) had passed.
He said: "We see the only way forward for the club is to effect a CVA and unfortunately time has run out. There is no time left to effect a successful CVA and to exit the club in a healthy capacity from that process.
"We told Duff and Phelps that on a number of occasions. The process has gone on far, far too long for various reasons. We told them last night they had until midday today to come back to us. They came back and wanted more time. They claim to have another interested party.''