The legal move has been brought by Business Secretary Vince Cable after an inquiry into the insolvency in 2012.
The role played by all board directors of the club in the three years prior to the administration in of Rangers Football Club plc was looked at by the UK Government's Insolvency Service's Investigations & Enforcement Directorate.
It is thought the grounds for Mr Whyte being banned are contained in a 1500-page dossier listing more than 20 different reasons relating to his running of the club.
A spokesman for Mr Whyte's legal team said: "We have instructions to vigorously defend the action by the Secretary of State and that is what we are doing."
Questions are understood to have been raised about Mr Whyte's failure to disclose that he had previously been banned from serving as a director when selling off the rights to three years' of Rangers season tickets to London-based agency Ticketus in completing his purchase of the club.
The move raised more than £20 million and paid off the club's debt with Lloyds Banking Group.
Last year, Mr Whyte was ordered to pay back nearly £18m of the money raised through the ticket deal, plus interest, to Ticketus following a High Court action. Ticketus had claimed Mr Whyte made deliberate misrepresentations over the season-ticket deal by failing to disclose his previous directorship ban.
Mr Whyte, who took over Sir David Murray's majority shareholding on May 6, 2011, was in 2000 disqualified to act as a director of for seven years.
Expected to be included in the examination are the £9m PAYE and VAT debt to the taxman amassed when the oldco under Craig Whyte's leadership went into administration, questions over whether the club was doing deals while heading for insolvency, and a failure to file financial accounts.
It is understood the submissions even question Mr Whyte's selling off of a historic shareholding in Arsenal to Alisher Usmanov, the Uzbek-born billionaire who owns almost 30% of the English Premier League club, severing a link that dates back more than a century. While the 16 shares sold for about £230,000 to Mr Usmanov's Red & White Holdings, the money was said to have been lodged in one of Mr Whyte's companies, not Rangers.
Mr Cable decided it was in the public interest to seek a disqualification order over Mr Whyte only, after a report was submitted by investigators. An Insolvency Service source said: "We have started disqualification proceedings against only Craig Whyte."