Former Rangers chief executive Martin Bain has dropped his legal action against the club, lawyers said on Thursday.
Mr Bain was pursuing the Glasgow club for almost £900,000 in damages, alleging a breach of contract following its takeover by businessman Craig Whyte.
The case at Scotland's highest civil court, the Court of Session in Edinburgh, was due to be heard in full in August.
Last year a judge told the club, which entered administration in February, to set aside almost £500,000 in the event that Mr Bain won his case.
On Thursday Mr Bain issued a statement via legal firm Levy & McRae in which he stated that he would discontinue the legal action.
He also said he will return the money frozen as part of his case, minus legal expenses, to the administrators "in an effort to help the club''.
Mr Bain's role at Rangers ended after Craig Whyte's takeover in May last year. The stricken Ibrox club went into administration on February 14 after the taxman lodged a petition over the non-payment of around £9 million in PAYE and VAT following the takeover.
Mr Bain insisted on Thursday that he would do everything he could to help the club "in these difficult times".
He said: "In light of the club's current position, I instructed my lawyers to advise the administrators that I am willing to discontinue the legal action and, subject to recovering the costs associated as a result of this action, I will give over to the administrators the remainder of the money that was arrested as part of my case in an effort to help the club.
"I always have done, and will continue to do, everything I can to help the club in these difficult times."