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Lola Cars has announced that it is going into financial administration as it continues to search for possible investors.

The group, which was formed in 1958, said the latest economic downturn has caused a serious cash-flow problem that had forced it into making the decision.

It also blamed the move on the HMRC not paying ongoing R&D tax credits.

"It is with enormous regret that a decision has been taken to issue Notices of intention to appoint an Administrator to Lola Cars International Limited and Lola Composites Limited," said Lola in a statement.

"This step allows the board to continue its discussions with possible investors and prospective purchasers with a view to securing the best outcome for the staff, creditors and customers of both businesses."

Founded in 1958 by Eric Broadley, Lola Cars has enjoyed success in virtually every formula of motorsport, from Formula 1 to CanAm and Formula Ford.

The company designed its first single seater, a Formula Junior, in 1960 and two years later entered Formula 1 with Reg Parnell's Bowmaker Racing team, with John Surtees and Roy Salvadori driving the Lola 4.

Surtees was involved in Lola's second F1 project, the famous 'Hondola' which he guided to victory at Monza in 1967. Further F1 projects followed, including with Graham Hill's Embassy team and Carl Haas's 1985 outfit, while Lola creations also enjoyed massive success in America.

In 1997 Lola attempted a factory F1 team, the Mastercard Lola squad, and signed Vincenzo Sospiri and Ricardo Rosset as its drivers. The project proved disastrous - underfunded and poorly planned, the car was not competitive and neither driver qualified for the season-opener in Australia, and the team pulled out of the sport. Within weeks Lola Cars went into receivership.

It was rescued by Irish businessman Martin Birrane, who placed more of an onus on sportscar racing as he gradually rebuilt its damaged reputation. A line of successful cars, from the B98/10 and B2K/40 through to the MG project, helped restore Lola Cars to one of the world's foremost customer racing car manufacturers.

Lola creations have claimed five LMP2 Le Mans 24 Hours titles since 2000. The company has also worked with major manufacturers including Nissan, MG and Honda. Last year it captured the LMP1 and LMP2 constructors' titles in the ALMS and the manufacturers' title in LMS.

Lola Cars is part of the wider Lola group, which also has interests in Defence, Aerospace, Composites and Renewables.

Lola said the board will not make any further comment until 21st May.