Jon Rahm was arguably the most high-profile name to join LIV when he left the PGA Tour in December 2023 for a deal worth a reported £222m ($300m)

Jon Rahm will leave LIV Golf after deeming the proposed terms for LIV 2.0 "unacceptable", his lawyer has told a bankruptcy court hearing.

The league, which filed for Chapter 11 bankruptcy protection in the United States in September after Saudi Arabia withdrew its multibillion-dollar funding, has secured a possible $300m in financing from BC Partners Credit in order to try to move forward with the 2027 season.

Rahm's lawyer, John Beck, told the hearing the 31-year-old Spaniard "independently reviewed the terms of LIV 2.0 and determined those terms are unacceptable as to him".

It was later said that LIV and Rahm's representatives are "in advanced discussions for a consensual separation agreement between Mr Rahm and LIV".

It is hoped this will be finalised by a court hearing on 5 November.

LIV's participants are owed at least $45m (£33m) and have the option to leave.

However, the agreement secures an extension for the league to discuss terms with its players, with talks now open until 25 October.

Documents outlining the money owed to LIV Golf's creditors, with the 30 largest unsecured claims, show that two-time major winner Rahm tops the list with an unsecured claim of $7.5m (£5.5m).

BBC Sport understands there is no obligation on players to sign on to LIV 2.0, regardless of whether they had previously signed multi-year contracts with LIV Golf.

Spain's Rahm was arguably the most high-profile name to join LIV when he left the PGA Tour in December 2023 for a deal worth a reported £222m ($300m).

Some players, including Brooks Koepka, have since returned to the PGA Tour, which rewrote its rules in December to allow the five-time major winner to come back, subject to certain sanctions.

Rahm did not follow suit and remained under long-term contract with LIV, but in May reached a deal with the DP World Tour - formerly the European Tour - to retain his membership and remain eligible for next year's Ryder Cup.

LIV golfers are automatically banned for a year by the PGA Tour. The DP World Tour offers a pathway because the leading 10 players on the European circuit currently gain access to PGA Tour membership.

In August, former world number one Rahm won his third straight LIV season title.

He has previously said he had no regrets over joining LIV and backed organisers to make it sustainable.

Chapter 11 protection postpones a US company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business.

Saudi Arabia's Public Investment Fund (PIF) is providing a bankruptcy loan of $49.6m (£36.6m) - called 'debtor in possession' (DIP) financing - to help fund the process.

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Meanwhile, former Masters champion Sergio Garcia was granted a special "deal" during Wednesday's hearing in New Jersey allowing his contract to be "terminated" as well as "rejected", following an application by his lawyers.

Once that termination agreement is signed, it is understood Garcia will be free to negotiate with third parties.

Earlier he had told media at the Open de Espana in Madrid how keen he is to be involved in next year's Ryder Cup as a player or vice-captain.

While he said that he was not sure what his future held and "everything is an option", he made clear he wanted to give himself "the best chance" of making the Ryder Cup team.

Lawyers for several other players, including Bryson DeChambeau and Cameron Smith, also spoke in the hearing to seek clarity on whether the rejection of the contracts equated to termination of the contracts.

One lawyer, representing five players including Smith, said clarity was needed on whether players could engage in discussions about "future plans with third parties".

The likely background to this is that players want to know for certain whether they are legally permitted to hold discussions with rival tours and also sponsors.

The DP World Tour, for example, is understood to be unwilling to have discussions with LIV players surrounding their futures unless they have proof that their contracts have been terminated.

There was no indication given regarding these players' positions in relation to LIV 2.0.

However, lawyers representing LIV did not agree to apply the same arrangement that Garcia had received, instead asking for more time to assess player contracts and the consequences of termination.

Keith Martorana, counsel for LIV Golf, said: "We are not looking to hold anybody up unduly but we have unfortunately at this point had no opportunity to review those contracts."

This matter has therefore been pushed back to a hearing on 14 October.

LIV insiders remain positive about the future, saying conversations with players are on track and the statements made in court have not changed the momentum behind the transaction.

Ted Goldthorpe, head of BC Partners Credit, told BBC Sport on Tuesday he was "confident" they would get the required number and calibre of players to sign up for LIV 2.0 by the new deadline of 25 October.

"The next focus for us is going to be to sign players, which we're going to work on for the next month. In parallel to that, we're going to be business planning, event planning, rehiring the staff, you know, and revitalising the LIV. I'm spending a lot of time on this right now."

Asked about conversations with players, he said: "I'm not that worried, I'm honestly not that worried about it. I don't think we have a hard deadline for a number of players or who those players are. But we feel pretty confident we have critical mass."

He added that BC Partners was wanting to be involved with LIV for the "long-term".

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