"We filed for insolvency this morning as well as for partial discharge of our debts and for a permit to continue playing," said a club employee, declining to be named.
The club, which spent heavily on players when it took part in the Champions League in 1998-99, 1999-2000 and 2000-01, said last November it had debts of 5.7 million euros and needed to plug a 2.0 million euro hole this year.
In a news conference on Sunday, Sturm Graz President Hannes Kartnig announced the step and admitted the club had spent a lot of money, mentioning the transfer of Ghanaian Charles Amoah.
The striker became Graz's record signing when the club paid around 3.9 million euros to secure his move from St Gallen in Switzerland in 2001. State broadcaster ORF reported that a decision on whether the club, due to celebrate its centenary in 2009, could continue to play would be made in eight to ten days time, citing the bankruptcy court.
Graz, who have been Austrian champions twice, in 1998 and 1999 and also won the Austrian Cup three times in the last decade, are currently sixth in the 10-team Austrian premier league.
They drew 0-0 with Mattersburg on Saturday and their next scheduled league match is at Ried next Saturday.
Kartnig told a news conference on Sunday that the decision had not been an easy one to take. "This must be the toughest step I have had to take in my entire career," he said.
Kartnig said he would not step down for now, but that he would be ready to leave once the club's future was secured. "I am not going to leave a sinking ship," he said. "I hope we will get out of that cul-de-sac."
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