The New York Times claims that UEFA’s financial investigators have recommended kicking Milan out of the Europa League for FFP violations.
The club was denied both a voluntary and settlement agreement after doubts were raised over the financial solidity of the club, their plans for future revenue and the status of owner Yonghong Li.
He was only able to complete the takeover from Silvio Berlusconi last year thanks to a €300m high-interest loan from US hedge fund Elliott Management and that needs to be repaid in October.
With interest, the full sum to be paid back is €380m, but Elliott Management could try to take control as early as Monday if the Chinese businessman does not provide another €10m of capital.
According to The New York Times, two people involved in the process confirm the UEFA financial investigators recommended Milan be excluded from European competition for violating Financial Fair Play rules.
A final decision is due over the next couple of weeks and Milan are mounting their own legal defence.
Exclusion would be the worst case scenario, but other options include fines, squad limitations and a block on new transfers.
If Milan are excluded, it would bump Atalanta into the group stage directly and allow Fiorentina to enter the preliminary rounds instead.