New Zealand's V8 motor racing scene remains riven by rifts and court action, even as one of the central bodies - Motorsport Promotions Ltd - has ceased trading and may be wound up.

In a story in April headlined "Wheels start to come off", the Herald on Sunday detailed dissatisfaction in motor racing circles with the performance of what was then known as The Motor Company (TMC) - the 60 per cent-owned promotional company of Motorsport NZ (MSNZ) which focused, among other things, on the NZV8 series.

After that story, MSNZ undertook a review of TMC, then re-formed as the Motorsport Promotions Ltd. The new body's board included the former CEO of TMC, Martin Fine.

However, on August 1, it was announced that Fine and Kerry Cooper, the former general manager of TMC, had resigned, signalling a "changing of the guard and a new approach for the company".

The new approach did not last long. The Herald on Sunday has seen a copy of a letter, dated September 7, sent to Brian Lawrence, NZV8 category manager and marketing manager for Motorsport Promotions Ltd (MPL) from Brian Budd, general manager of MPL which says: "... I regret to advise that Motorsport Promotions Ltd, due to financial difficulties, is to cease trading.".

The letter goes on to say that Lawrence's position would cease "as Motorsport Promotions is not in a position where it can continue to incur further debt".

It also acknowledges a debt of about $25,000 to Lawrence but said the sum was not able to be paid immediately "as the Company will need to generate some cash flow from the sale of some of the assets".

It is understood the promotions company, whether TMC or MPL, has lost over $460,000 over the last two years - and there are suspicions there is more to come. A liquidator has been appointed.

Only three new cars had signed up with the NZV8s for this season, leading to speculation last month that the ailing MSNZ series would link up with the successful breakaway group, the V8 Supertourers.

However, motor racing sources said that would only happen if the legal action being pursued by VEEGA (the company formed to co-ordinate and represent the interests of the entrants in MSNZ's V8 series) against the Supertourers was ended.

That action hinges around the contention that NZV8s' intellectual property was used when the Supertourers were formed. A hearing has been set for July 1 next year and a judgement from Mr Justice Woolford on interlocutory matters, delivered on September 13, raised the potential issue of anti-competitive laws.

The Supertourers defendants asked that VEEGA pay $75,000 as security against costs. The judge said such security should be provided "on the basis that there is reason to believe that VEEGA will be unable to pay the costs of the defendants if it is unsuccessful in its claim".

The Supertourers defendants also questioned whether MSNZ was funding VEEGA's litigation - which could raise the anti-competitive issue of a New Zealand motor racing body attempting to thwart legitimate competition in a sport it was charged with regulating.

The judge said: "The defendants submit that there appears to be risk that VEEGA's litigation funding arrangements are tainted by anti-competitive conduct."

He ruled that VEEGA provide $50,000 for security of costs and ordered a stay of proceedings until funding arrangements were disclosed.

- By Michael Burgess of the Herald on Sunday