However, a long-serving coach and administrator is confident club and school basketball competitions will still operate next season.
Following five months of speculation about its financial position, and confirmation the Otago Nuggets were withdrawing from the national league, BBO issued a statement advising its financial position was beyond salvaging.
''Basketball Otago's financial position is such that in the board's opinion, having taken legal advice, it cannot continue to operate,'' chairman Ricky Carr said.
''The board has been trying very hard to find a way to resolve its financial predicament. This has proved impossible.''
BBO has sent letters to its creditors advising them of the situation, and given its members notice of a special general meeting on December 16 to appoint a liquidator. Mr Carr said the BBO board would be working with Sport Otago to look at ''options'' for community basketball to continue.
BBO will hold its annual meeting next Wednesday, when it is expected to report a third consecutive deficit. The accounts for the financial year ending December 2013 have not been made public, but the Otago Daily Times understands the deficit will be about $50,000.
BBO reported a loss of $13,166 for the financial period ending December 31, 2012. That loss followed a deficit of $36,787 recorded during the previous period, which meant BBO started 2013 with negative equity of $52,832.
Sources close to the issue said BBO's final debt could be between $160,000 and $200,000.
Liquidation is taken when liabilities outweigh assets and there is no ability to clear debts. A liquidator will investigate the organisation's finances, and sell any assets to try to repay creditors.
The board took steps to cut its expenses in June. A review of BBO's financial position made general manager Markham Brown's position untenable and he resigned. Office and events manager Sandy Wallace was made redundant shortly after.
In August, director of development and Nuggets player-coach Mark Dickel accepted a coaching role with the Canterbury Rams.
Former Nuggets player and coach Todd Marshall, who was seconded to the board in January, said the board had been working all year to avoid liquidation.
''It just got to the stage where it has come to a head and we can't continue,'' Mr Marshall said.
He was uncertain how many basketball players would be affected by the decision but it is thought there are 4000-5000 registered players in the region.
''That is the sort of stuff we have to look at now, and with Basketball New Zealand and Sport Otago, to see what can be put in place to ensure that the competitions can be in place for next season, basically.''
Mr Marshall started playing miniball 40 years ago and the sport has been an enormous part of his life.Helping make the decision to shut BBO down had been ''pretty unpleasant'', Mr Marshall said.
''It is a horrible place to be. But I think the club competitions and the school competitions will get picked up by somebody. That will get sorted. I don't see any issue there.
''[Grass-roots] basketball has been going really well. It is just disappointing the back office hasn't done its job to support the good things that have been happening on the court.''
The board had made some tough decisions that needed to be made this year but the financial barriers had proven insurmountable, he said.
''The board is there to govern and should be doing its job properly. But it is not there to run the business day to day. But I don't think it would be helpful to point fingers. All round, things have not worked like they should.''
