The DNCG, the entity that controls clubs' finances, had announced the administrative relegation of Sochaux last month even though they finished ninth in the league standings -- 10 points above the relegation zone.
The team is one of the founding members of the French League and had appealed the decision, but the DNCG confirmed their relegation earlier this week.
Sochaux said they had "drastically reduced" the club's wage bill and transferred players to cut costs but needed cover from the Nenking Group to cover the projected deficit to June 30th 2024, which did not materialise.
"Given the situation in the Chinese property market, which deteriorated again in the second quarter of 2023, the Nenking Group was unable to generate sufficient cash to cover FC Sochaux-Montbeliard's (FCSM) projected deficit," the club said.
"So it was without this evidence of a bank transfer from China that FCSM appeared before the DNCG appeal committee... The latter confirmed their decision to be demoted to National 1.
"The management of FC Sochaux-Montbeliard shares the grief of all the club's supporters and employees, and regrets the consequences of this situation."
The club said they are now working to present a new budget that will allow them to play in the third tier next season.
The Nenking Group, a private conglomerate based in Southeast China's Guangdong province, did not immediately respond to a Reuters request for comment or an explanation as to why they opted out of assisting the French club.
There was no mention of the news regarding Sochaux on the group's official website or official social media accounts on Thursday.
Instead, the group still proudly lists its purchase of Sochaux on its "About us" page, saying that it bought the club in 2020 "to expand its reach in the European football field".
The club was founded nearly a century ago by French automobile company Peugeot and they won the top division league title in the 1934–35 and 1937–38 seasons.
They also won the French League Cup in 2004 while their last major trophy came in 2007 when they won the Coupe de France, the country's premier knockout cup competition.
Peugeot sold the club in 2015 when they were in the second tier and ownership has since changed hands from Ledus to the Nenking Group, who formally acquired the club in 2020.
At the time, the club's newly-appointed Executive Director General Samuel Laurent said Nenking Group chairman Zhong Naixiong wanted to restore the club's status as a top-tier team in "three or four years".
Chinese football has been rocked by several similar incidents in recent years.
In 2021 reigning Chinese Super League (CSL) champions Jiangsu Suning were abruptly told by their owners, the Suning group that the club would cease operations.
Before that Guangzhou FC, formerly CSL heavyweights Guangzhou Evergrande, were hit hard by the impact of massive debts facing their owners, the Chinese property giant Evergrande.
