Neuchatel Xamax filed for bankruptcy on Thursday after failing to win their Swiss Super League licence back on appeal having been kicked out last week and the club's owner, Chechen Bulat Chagaev, has been arrested on suspicion of fraud.
"Neuchatel Xamax has decided to file for bankruptcy because of the withdrawal of the licence and financial position of the company," the club said on its website.
"The board has also decided to release the players from any obligations," it added in a short statement.
Businessman Chagaev was ordered to be held on remand in Geneva's Champ Dollon prison following a hearing before the public prosecutor Yves Bertossa on Thursday afternoon.
"A further hearing has already been scheduled for tomorrow (Friday)," the Geneva judicial authorities said in a statement.
Courts can order a suspect to be remanded without charge if there is strong suspicion a crime has been committed and if the suspect is considered likely to flee, destroy evidence or endanger others.
On January 18, Neuchatel were expelled by the Swiss Football League (SFL) on suspicion that a document produced as a financial guarantee for the club was false. Its appeal to get its licence back was rejected earlier on Thursday.
Before its expulsion, the club had been docked eight points over problems in paying players' wages and social security contributions and was again reported to the Swiss FA disciplinary committee for a breach of regulations on January 17.
Once a close associate of Chechen President Ramzan Kadyrov, Chagaev has kept Neuchatel centre stage since he bought the relegation-threatened club last May and said he wanted to make them Swiss champions and earn a place in the Champions League.
He then fired four coaches in five months but Neuchatel, while no longer battling relegation, struggled to capture the imagination of the fans as they failed to challenge the leaders.