Russo resigned on Tuesday and demanded his money back by Thursday despite the ramifications for the club, who would be deducted 10 points and plunged towards the relegation zone.
Watford manager Malky Mackay and legendary ex-manager Graham Taylor – now installed acting chairman – have begged Russo to suspend his demand in favour of a £7.5 million rights-issue rescue package from majority shareholder Lord Michael Ashcroft.
But Russo has snubbed the proposal and is to call in the administrators.
In a statement issued via his company, Valley Grown Salads, Russo claimed the proposal from Lord Ashcroft's company, Fordwat Limited, is not viable.
Russo also says his "significant and repeated" efforts to save the club have been rebuffed by the club and Lord Ashcroft.
The statement read: "The rights issue proposal, while it might superficially be attractive, does not bear close examination.
"It gives Fordwat the opportunity to consolidate its control of the company without making an offer to other shareholders.
"In the circumstances, VGS has rejected the proposal, has announced its intention to appoint an administrator of the club and will now be serving a formal demand on Watford Leisure PLC under the terms of its guarantee for repayment of the debt owed by the club to VGS.
"VGS has been left with no alternative than to take these steps.
"It does so with the greatest reluctance and only after significant and repeated efforts on its part to salvage the club have been rebuffed by the board and by Fordwat."
A senior Watford source said: "Russo's actions prove this is no longer about money, it is about control of the club.
"These people are playing with the future of this football club. The people who were saying they would not put this club into administration are now doing just that."
Former Watford owner Sir Elton John, who is planning a benefit concert for the club at Vicarage Road in the summer in order to help raise funds to strengthen the playing squad, is being kept informed of the situation.
