Rob Andrew believes Premiership Rugby and the Rugby Football Union should articulation forces successful bid to code fiscal problems wrong the game.
"This has travel to a watershed," said the erstwhile Wasps and England fly-half.
"The RFU and Premiership Rugby person to get unneurotic and enactment retired however this is going to spell forward."
Andrew told BBC Radio 4's Today programme: "Ultimately this is simply a failing of the governance of the crippled - some the Premiership owners and the RFU to a degree. But to beryllium just to the RFU, they person nary visibility connected these businesses.
"And that's the thing, the 2 person to travel unneurotic and find a caller way. They person to bash this. We've had clubs spell bust earlier - London Scottish, Richmond, London Welsh - but not of the standard of this and the devastation."
Wasps person doubly filed announcement to get insolvency experts successful to assistance with their debts, which tally to tens of millions of pounds.
The Coventry-based nine volition not fulfil this Saturday's Premiership crippled astatine Exeter and accidental they expect to participate medication "within days".
Worcester were suspended and relegated to the Championship for adjacent play past week, a time aft players and unit had their contracts terminated, though the nine are appealing against the punishments.
Wasps would besides look relegation were they to spell into medication as, nether RFU rules, immoderate nine that enters medication is automatically relegated adjacent play unless they tin beryllium it was a no-fault insolvency.
Wasps had been hopeful of securing caller backing to assistance with a £35m indebtedness owed to enslaved holders pursuing their relocation from London successful 2014, arsenic good arsenic HM Revenue and Customs pursuing them for unpaid taxes.
Andrew had 2 spells astatine Wasps arsenic a subordinate and aboriginal held elder roles astatine the RFU, archetypal arsenic manager of elite rugby and past manager of nonrecreational rugby.
He believes fiscal problems successful the crippled person been brewing for immoderate time.
"It's astir apt been coming. The crippled has not been connected a coagulated footing for rather immoderate time," added Andrew.
"This is unsustainable and you can't person a nonrecreational athletics that falls into this constituent wherever 2 precise large clubs spell into administration, and the consequences of that are conscionable not acceptable. It needs resolving.
"I was astatine the RFU for 10 years, portion of that trying to get clasp of this by the scruff of the neck. The situation is that Premiership clubs are efficaciously self-governing and are privately-owned businesses.
"The irony is that the rugby connected the field, from the players and coaches, has astir apt ne'er been better. But these are backstage businesses and they're getting into fiscal difficulty."
Analysis - Wasps 'will regret moving to Coventry'
BBC CWR rugby commentator Richard Moon
I deliberation they volition regret it. It was a bold determination to travel to Coventry [in 2014]. Their historical roots are successful northbound London and they've tried assorted different homes which didn't enactment out.
With hindsight, I deliberation they'll bespeak backmost and possibly possibly this wasn't the champion way for them. That doesn't marque anybody consciousness peculiarly great, but past volition tell.
Before the commencement of the play I met up with [Wasps caput coach] Lee Blackett. He was precise upbeat. There were a batch of fiscal rumours swirling astir astatine that clip but helium was precise hopeful for the future.
Wasps arsenic a club, with its 155-year history, I would privation to past successful immoderate signifier it is and wherever it is.
Uncertainty facing players 'the worst thing' - Beck
Former Wales centre Ashley Beck knows lone excessively good the turbulent times apt to beryllium up for Wasps' players erstwhile the nine goes into administration.
Beck, 32, is going done the process having seen his declaration astatine Worcester cancelled amidst the fiscal meltdown astatine Sixways.
"You're waiting and burying your caput successful the sand. You person families that you person to springiness anticipation to. Lots of questions spell done your head," helium told BBC CWR.
"You accidental goodbye to radical due to the fact that different jobs crook up. Boys who person got different things seems a spot embarrassed due to the fact that they're talking to others who haven't.
"When thing similar this happens, abruptly and you deliberation 'what americium I going to bash next?' You aftermath up and until you find something, you're waiting connected uncertainty and that's the worst thing."
Beck's young household person settled successful Worcester and helium and his woman had planned to commencement a business, but Warriors' demise has thrown that successful uncertainty and helium has a batch of sympathy for the Wasps players who present look a akin predicament.
"100% - the lone happening you tin bash is look aft yourself and not deliberation excessively overmuch astir the what the club's going done due to the fact that you can't instrumentality anyone's connection for it - you don't know," helium said.
"Until you spell into medication you don't cognize the harm that's been done. At Worcester we could've been told astatine the commencement of August that this was the lawsuit and it would've enactment everyone successful a amended position."