AUCKLAND, NEW ZEALAND - JULY 20: (FILE PHOTO) Otago celebrate winning the Lindsay Colling Memorial Trophy during round two ITM Cup match between Auckland and Otago at Eden Park on July 20, 2011 in Auckland, New Zealand. An announcement made this week indicated that the Otago Rugby Football Union is likely to go into liquidation on Friday with debts over NZ$2 million. Stewart Tew of the New Zealand Rugby Union said that it is 'a sad day' and despite an annual injection of almost a million dollars per season into the ORFU the defecit was too much to make-up. The club has a 131 year history. (Photo by Sandra Mu/Getty Images)

The cash-strapped Otago Rugby Union (ORFU) will come to a settlement with all of its creditors by the end of the month and can look forward to a “brighter future”, the New Zealand Rugby Union (NZRU) said on Thursday.

The ORFU faced liquidation in March because they could not service NZ$2.35 million of debt, pay players' wages and administrative staff or their bills.

Smaller creditors will receive everything they are owed, while bigger companies will get NZ$5,000 and half of what they are owed above that.

The terms of the rescue package, which included a long-term loan of NZ$500,000 from the NZRU, meant the directors had to resign and a new board has now been appointed.

“The stage is now set for the union to face the future with confidence,” NZRU chief executive Steve Tew said in a news release.

“We thank all our partners who have worked hard over the last few months to ensure this 131-year-old rugby institution can survive and play its part in the Otago community.”

The Dunedin-based Otago Highlanders Super Rugby team were not impacted by the crisis having being hived off from the ORFU as a separate legal entity.

The ORFU run the representative team in New Zealand's semi-professional provincial competition and community rugby. – Reuters