In January 1995, after several seasons spent near the bottom of the Football League and nearly a decade of financial difficulties, the club was declared insolvent and placed in receivership.

Gillingham finished the season 19th in the Third Division, but the club's continued existence remained in doubt until June, when it was purchased by businessman Paul Scally.

The highest attendance recorded at the club's home ground, Priestfield Stadium, was 10,425, for the FA Cup game against Sheffield Wednesday.

The lowest attendance was 963, for a Football League Trophy game against Brighton & Hove Albion, which was the smallest crowd recorded for a competitive match at Priestfield for more than 20 years.

[5] Adrian Foster, a forward, was the only new player to join the club before the start of the season, arriving from Torquay United for a transfer fee of £60,000 (equivalent to £150,000 in 2023).

[13] The away kit, to be worn in the event of a clash of colours with the home team, was all red with similar black and white panels on the shirts.

[6] He scored his first goal for the team in the second league match of the season, a 3–0 victory away to Wigan Athletic; this was Gillingham's biggest win away from home for more than three years.

[17] Gillingham then began a run of consecutive defeats, losing at home to Preston North End and away to Hartlepool and Walsall.

[14] With Foster still out of action and Ritchie due to return to Dundee, Flanagan signed experienced Welsh forward Chris Pike from Hereford United for £15,000 (equivalent to £40,000 in 2023);[19] he made his debut on 1 October at home to Mansfield Town.

[14] The team's form away from home remained poor, however; they played three further away matches during February, against Chesterfield, Darlington and Mansfield Town, and lost all three without scoring a goal.

[14] On 28 February, three days after Gillingham lost to Mansfield, the administrators made Flanagan redundant as a cost-saving measure; Smillie was appointed player-manager for the remainder of the season.

[33] Steve Brown, newly signed from Colchester United in a player exchange deal under which Robbie Reinelt was transferred in the opposite direction,[34] made his debut against Bury in place of Pike and scored Gillingham's goal; Brown would start every game for the remainder of the season, paired with either Foster or Pike.

[40][41] Due to Heybridge's stadium failing to meet the requirements for this stage of the competition, the match was played at Colchester United's Layer Road ground.

[43] In the third round, Gillingham played Sheffield Wednesday of the Premier League; the match drew a crowd of 10,425, the largest attendance recorded at Priestfield since 1987.

[44] Sheffield Wednesday took a 2–0 lead in the first half and, despite having their starting goalkeeper, Kevin Pressman, sent off and Pike scoring from a penalty kick, the Premier League team held on for a 2–1 victory.

David Hunn of the Sunday Times wrote that Gillingham "dashed incessantly at their mighty but depleted visitors" and "went hell for leather for the equaliser" but were thwarted by substitute goalkeeper Lance Key.

^ The match was played at Colchester United's Layer Road ground, but remained officially a home game for Heybridge rather than being considered to have taken place at a neutral venue.

[51] The game was played at Birmingham's St Andrew's stadium and drew a crowd of 17,028, by far the largest attendance for a match involving Gillingham during the season.

In contrast, both Jon Hooker and Abdul Kamara played only in one League Trophy match; in both cases it was the only appearance the player ever made for Gillingham.

[36] FW = Forward, MF = Midfielder, GK = Goalkeeper, DF = Defender At the end of the 1994–95 season, with no rescue deal finalised, fans were unsure whether the club would still be in existence to start the next season;[55] one takeover bid had already collapsed when the leader of the consortium resigned after adverse publicity surrounding his financial status.

[56][57] In early June, however, shareholders and creditors voted overwhelmingly to accept a takeover bid from Sevenoaks-based businessman Paul Scally, who paid a nominal fee to purchase the club.