But he is hopeful, even if the union is liquidated tomorrow, the successful Highlanders First XV competition will be able to proceed.
Smith, the director of the Otago Secondary Schools Sports Association and a former long-serving ORFU employee, is leading the bid to find $80,000 to run the schoolboy competition.
"Listening to those presenting the state of the financial situation of the ORFU at the AGM was devastating," he said. "The people at the heart of rugby in our province were stunned with the news.
"We all have our own thoughts of why this has happened but now is not the time to point the finger, but instead try to put things in place so that the players at the grass roots of our game are catered for."
A special meeting has been called for today so secondary school rugby representatives can discuss the issue.
Smith said the Highlanders First XV competition was seen as vital for the development of the sport. Some sponsorship for this year's competition had already been secured from Otago, Southland and North Otago businesses.
That still leaves other levels of secondary schools rugby to protect, and Smith said there were "capable administrators" who had already indicated they would help.
"We have also had discussions with John Brimble from Sport Otago, who are willing to assist by giving support to the organisation of community rugby, particularly in the primary and secondary schools area.
Smith was confident the rugby fraternity would not allow the sport to wither and die.
