The Blue Knights have announced they are taking a step back from the process leaving a Singapore-based group in pole position to buy Rangers.
The Blue Knights, spearheaded by former Rangers director Paul Murray, were offered the chance to enter into exclusive talks with administrators over concluding a deal.
But, during a delay in attempting to raise a £500,000 fee to do so, their financial backers Ticketus agreed a deal with the Singapore group that the Blue Knights cannot match.
They have now moved aside in the hope that Bill Ng's group can conclude a deal but they could re-enter the fray if no agreement is reached.
In a statement, the Blue Knights said they were taking "a step back to enable Duff & Phelps, Ticketus and the Singaporeans to conclude a deal as quickly as possible or not".
Ticketus have a contract giving them the rights to £27million of season-ticket money over the next three years after providing capital to the club since Craig Whyte's takeover in May last year.
The Blue Knights, whose bid was backed by fans, had agreed a new deal that would see the investment firm paid back only £10million of that money over a longer period in return for financial backing for their offer.
The Blue Knights revealed they had confirmed their offer on Thursday following a request by administrators Duff and Phelps.
"We reconfirmed our position and we believed that we would be awarded preferred bidder status on Friday morning," the statement read.
"As part of the process of awarding exclusivity, Duff & Phelps had requested a non-refundable deposit.
"During the course of Friday Ticketus informed us that they were not prepared to provide this deposit.
"During the course of the weekend individuals within the consortium offered to put up the deposit subject to a small number of conditions which were broadly agreed with Duff & Phelps.
"During the course of the weekend we were also made aware that Ticketus had been in discussions with the Singaporean consortium who, on Friday, had offered Ticketus a 'substantially' better deal to the one offered by us.
"We confirmed that we were not prepared to increase our offer to Ticketus which we believe to be in the club's best interests."
Rangers went into administration on February 14 and four final offers were received by the deadline on April 4, one of which, from a German group, was rejected.
The Blue Knights statement continued: "The consortium believes that the whole deal process has become incredibly complex and it is critical that a preferred bidder is appointed this week.
"As a consequence, and in the best interests of the club, the consortium has decided to take a step back to enable Duff & Phelps, Ticketus and the Singaporeans to conclude a deal as quickly as possible or not.
"We stand ready to complete our offer of 4 April which included a deal in principle with Ticketus.
"We still believe that a partnership with Ticketus represents the best opportunity of the club exiting administration via a CVA.
"We firmly believe that, in the best interests of the club, the whole process has to move forward as a matter of urgency.
"We are stepping back to assist with this but we stand ready to re-enter the process if a deal can not be reached."
Duff and Phelps soon responded by saying they hoped to announce a bidder in the coming days.
David Whitehouse, joint administrator, said in a statement on Rangers' official website: "It is disappointing the Blue Knights are withdrawing at this stage, particularly in view of the fact that last week it was made clear to them and Ticketus that their indicative bid placed them in a strong position.
"We were therefore surprised that their offer to pay an exclusivity fee was withdrawn and although discussions over the exclusivity fee continued over the weekend, no agreement was reached.
"At all stages of the process, the Blue Knights/Ticketus bid has been given the most serious consideration by us as administrators, particularly due to the fact that it was being encouraged by supporters' groups.
"We are aware that Ticketus has also been, at their own instigation, in parallel discussion with one of the other bidders over the last few weeks and it remains to be seen whether these discussions will be taken forward.
"We can reassure supporters of the club that we look forward to making an announcement on a preferred bidder later this week, assuming no further hurdles are placed in our path.
"While we as administrators have a statutory duty to look after the interests of creditors and to keep the business going, it is of paramount importance that the bid which is taken forward is the best on offer for Rangers Football Club."
Irrelevant
Whyte, who bought 85% of the club's shares for £1, earlier reiterated his stance that any preferred bidder would have to come to a deal with him too, although Duff and Phelps have previously described him as "irrelevant".
Whyte has not spoken to the other interested party, US businessman Bill Miller.
"I have spoken to two of the bidders, the Singaporean bidders and the Blue Knights," Whyte said.
"But I have not spoken to Bill Miller and I have no plans to speak to him. He has not made contact with me.
"I am happy to have a conversation with them or anyone who is interested, but it is my understanding, through third parties, that they (Miller's consortium) want liquidation and that is no good for the club.
"But anyone who is named the preferred bidder will have to talk to me and thrash out a deal."
