The Football League have given permission for Coventry to play at Northampton Town for the next three seasons, in exchange for a £1million bond.
In a statement, FL chairman Greg Clarke said "With no prospect of an agreement being reached between Otium and ACL, the Board was placed in an unenviable position - with the very real possibility of Coventry City being unable to fulfil its fixtures for next season. This would inevitably call into question the Club's continued membership of The Football League.
"The Board did not take this decision lightly and it remains a matter of deep regret that the two parties involved cannot come to an agreement."
The majority of Coventry fans are now expected to boycott the club, with a move to set up a new club in the city already underway.