Worcester Warriors rival bidder Steve Diamond says the club would have played in the Championship this September, and still be playing under their existing name, if their offer had been accepted.

Atlas also announced a plan to merge with fourth-tier side Stourbridge.

"It looks like they're clutching at straws," Diamond told BBC Sport.

"There's an old saying that, in desperate times, people do desperate things.

"What would I have done? I'd be playing in the Championship in September."

It has been reported that the new owners Jim O'Toole and James Sandford, from the Atlas Group, did not pass a 'fit and proper persons test' when the club's bid to be allowed to start next season in the Championship was rejected by the Rugby Football Union on 16 December.

They had already been chosen as preferred bidders in October by administrators Begbies Traynor following Warriors' early season financial collapse under previous owners Colin Goldring and Jason Whittingham.

But Diamond says that his consortium, allied with Warriors club sponsor Adam Hewitt, did actually have RFU approval.

"We agreed with everything the RFU put in front of us, including paying the rugby creditors," he said.

"I feel like the administrator has a statutory duty to the creditors. There are players, sponsors, supporters, staff, who are all owed a hell of a lot of money and none of them will receive any of that because of this.

"If you pass the fit and proper person's test, part of that is agreeing to pay the unlimited amount of rugby creditors, which our consortium agreed to pay."

The complication comes about from the way Warriors were structured under the previous owners.

WRFC Trading Ltd, the part of Whittingham and Goldring's operation which owned the ground at Sixways, went into administration on 26 September.

WRFC Players Ltd, through which the Warriors players and staff were paid, was then wound up in the High Court in London on 5 October, causing the cancellation of contracts.

"The rugby creditors are not looked upon by the administrators as secure creditors, so there's a loophole," added Diamond.

As well as the proposed alignment with Stourbridge, which also needs RFU sanctioning, Diamond was also critical of the proposed name change to Sixways Rugby from Worcester Warriors.

That is how they have been known since being rebranded and breaking away from the original Worcester Rugby Football Club by former owner and benefactor Cecil Duckworth in the late 1990s.

"People are proud of the name of their city," said Diamond. "Sixways is an infrastructure on the M5.

"It's great to have a plan, but this plan has never previously been identified or discussed.

"The people who take over the legacy of Mr Duckworth have to have a plan for Worcester Warriors.

"The DCMS (the government Department for Culture and Media and Sport) have demanded a parliamentary hearing and the governing body have been hauled over the coals.

"The plan had to stand up to rigorous questioning - and that appears not to have happened. That's why this tangent has been taken, to go down three divisions to try and amalgamate with another first team at another club."

The plan to ditch the Worcester Warriors name was announced by co-owner O'Toole in an exclusive interview to BBC Hereford & Worcester on Thursday.

The decision was made in an attempt to counter what the new prospective owners deemed to be the "negativity" associated with the existing brand - but it immediately led to a local outcry.

Fans made their feelings clear to the BBC both on social media and on air but O'Toole's co-owner, fellow Irishman Sandford, speaking to BBC Radio 5 Live on Friday, said that decision is not irreversible.

"There are parts within our control," he said. "One element of that is the brand.

"If we've got that wrong, I think we can hold our hands up and be honest and say 'it was a step too far'.

"We're looking at everything and listening to everything. We've listened to the fans and community and we can look to re-engage.

"We will stand up and be accountable for our mistakes and if that is one of them we can look at that, absolutely.

"From our perspective, the club itself is the people around it, the community, the fans who are involved. We have come in to clean up a situation that has been created, make no qualms about it, by the previous owners under the RFU's watch."

Sandford also insists that the Atlas Group were also committed to paying off Warriors' rugby creditors.

"We have never said that we would not pay rugby creditors, even with the new approach," he told BBC 5 Live. "That's something that's been picked up and run with that's not entirely true.

"Let's be transparent that in December, we had focused primarily on entering the Championship under Worcester Warriors.

"It was made very clear to us we were to sign the insolvency terms as they stood, or there was no point in engaging any further.

"Part of our bid was to pay off the rugby creditors and we had what to our side was an insurmountable sum of a range of £2m and £8m.

"But we had terms put upon us by the RFU to pay that within 30 days without having the opportunity to do any due diligence on those, or understand who was the most critical of those rugby creditors.

"We agreed that we wouldn't pay them in full but that we needed some time.

"It is a difficult and trying time. We knew we were coming into a situation which was going to be challenging but we need to turn this round not for a quick solution. We need to make it sustainable."