D-DAY: The liquidation of the proud Otago Rugby Union has been delayed for a week.

In an 80 minute miracle, the beleaguered Otago Rugby Football Union (ORFU) has managed to stave off liquidation for now.

Faced with debts of $2.35 million that it could not pay - and the prospect of pushing that tally past the $3m mark if it had played on - the ORFU had been expected to today bring to an end to 131 years of administering the national game in the province.

However, furious behind-the-scenes negotiations have seen a possible rescue package stitched together, which may see the ORFU survive.

''We had a meeting at 2pm, considered the state of play and where we've got to in unravelling the true position of the union, and we've decided to extend the deadline for seven days,'' ORFU president Wayne Graham said.

''That gives us a little bit more time to evaluate the true position.''

At Monday's ORFU annual meeting, Graham revealed to stunned delegates the union owed 180 creditors $2.35m.

Its four main creditors include the Bank of New Zealand and the Dunedin City Council, which is owed about $400,000 back rentals for use of the Carisbrook rugby ground.

The DCC purchased Carisbrook three years ago, a deal designed to help the ORFU out of an earlier financial crisis and prepare it to play its future games at the new Forsyth Barr Stadium.

However, the deal did not cover all the ORFU's debts, and what it owed continued to spiral upwards as the union chalked up the latest in a succession of six-figure losses last season.

Graham said he did not want to go in to details of the negotiations as they were sensitive and involved several parties.

''I think we have seen some hope. Our objective, if at all possible, is to stave off the liquidation position, but it is very sensitive and I can't reveal what the plans are.''

However, Graham did not deny the ORFU's financial position remained dire and said the chances of its survival remained slim.

''I think there is some optimism, but there is still a long way to go.''

The ORFU's situation does not affect the Highlanders, which are a separate entity under the auspices of the NZRU.

Otago's contracted players who earn between $15,000 and $60,000 apiece per season have had their wages covered by a benevolent fund for now. It is understood other rugby unions have already approached some Otago players on the assumption they would be out of a job after today.

The ORFU's staff remain in limbo, although some are likely to be retained by the NZRU to administer community rugby.

Many Dunedin and Otago businesses will be waiting anxiously for news; the ORFU owes trade creditors around $850,000.

The New Zealand Rugby Union stepped in earlier this week to put funding and support staff in place to ensure club and schools rugby would still be played in Otago this season.

"Obviously things are at a very delicate stage, so we are not in a position to discuss the shape of any deal," NZRU CEO Steve Tew said.

"I have to say that the situation's still very grave down there but we've bought some time and we're hopeful that time will give us a solution."

Tew was naturally an optimist but the position was complicated.

"We certainly do not want to end up with a situation that has us back here in six months time. So we've got to have some ability to deal with the debt, we have to have some ability to deal with the long term sustainability of the Otago union, and neither of those things are simple or straight forward," he said.

"There's a whole lot of stuff that needs to all work."

Part of the work involved trying to put in place a structure around an Otago team to compete in the ITM Cup competition.

"We were always trying to get a team in the competition, with or without the Otago Rugby Union being incorporated," Tew said.

Part of the work involved trying to put in place a structure around an Otago team to compete in the ITM Cup competition. The aim was to get that in place for this year.

"I think what we're seeing is a settling. The professional game's still relatively new in this country. We're evolving and learning as we go."

No union should spend more money than they could afford on their players, he said.

"You don't need a salary cap to restrain spend. You just need sensible behaviour."