Alain Prost's Formula One team folded on Monday after failing to secure financial guarantees to allow them to keep racing.
"The court pronounces the liquidation," the president of Versailles commercial court told four times World Champion Prost and his lawyers.
The French team were placed into receivership on November 22 because of debts estimated at $28 million. Despite reports that Prost Grand Prix, launched in 1997, had recently received bids from a group of Italian investors, the court found that there were not enough guarantees for the team to continue.
The opening race of the 2002 World Championship takes place in Melbourne on March 3 but Formula One will again have 11 teams since Toyota will be making their Grand Prix debut.
The widely expected court decision leaves Prost's 300 employees out of work while probably clearing the way for German Heinz-Harald Frentzen, who drove for Prost at the end of last season, to join Arrows.
Launched in 1997 after he bought Ligier, Prost Grand Prix's record in five seasons was unimpressive. As a driver, Prost entered 199 Grand Prix and won 51, a record only surpassed by Michael Schumacher this past season. As a team, Prost Grand Prix took part in 83 races and won none, failing to claim even a single pole position.
Prost achieved his ambition of becoming a team boss by taking over the ailing Ligier team, marking the first step on what he saw as the path to French motor racing glory. After a promising start, things went from bad to worse for the team, who scored no points in 2000 and lost sponsors as well as their engine maker Peugeot.
Last season, with a Ferrari engine, Prost finished ninth in the Constructors' Championship with a meager four points. The announcement of Prost's bankruptcy came the day after French carmaker Renault trumpeted their return to Formula One.