The club's chairman Roger Blyth released a statement saying: "Welsh Rugby Union chief executive David Moffett's plan for regional rugby in Wales is now taking shape and, as a result of the WRU EGM just over two weeks ago, all nine Premier Division clubs will, from next season, become semi-professional clubs.
"As such, our funding will be reduced from its current annual level of almost £1m, to just £50,000 a year. The WRU has categorically stated that it is up to the current Premier Division clubs to handle their own liabilities and that no compensation will be on offer.
"This stance has been adopted by the Union in order to prevent the new playing entities being saddled with the liabilities of the current Premier Division clubs.
If we hadn't followed this route, our only options would be to either liquidate the Club, something we are not prepared to consider even for a millisecond, or go into litigation with the WRU which would only serve to compound the current misery that Welsh rugby finds itself in.
"As a result, Swansea now has on-going liabilities which cannot be met - primarily in the form of player contracts. With a guaranteed future income of only £50,000 from the WRU next season, we would be acting unlawfully to continue to trade in our current position.
"From the end of this season, Swansea will have less overall income than it did 20 years ago, not only due to the vastly diminished Union funds, but also with the prospect of reduced gate receipts, sponsorship, commercial revenues and European funds.
"Over the past few weeks, we have taken the highest possible professional advice from leading accountants, RSM Robson Rhodes, regarding the appropriate action necessary to protect Swansea RFC's playing and financial future.
"The advice we have received is that the most responsible and professional course of action is to apply for a temporary administration order."
