Lord Chadlington told a House of Commons select committee that present debts of pounds 4.7m could nearly double over the next two years.
The Culture, Media and Sport Committee was discussing, among other things, the shock proposal made on Monday by the Secretary of State,Chris Smith, that Britain's two national opera companies share a home in Covent Garden; that the Royal Opera House is renamed Covent Garden and becomes a receiving house; and that the English National Opera's present home, the London Coliseum, ceases to be a national opera house.
But Lord Chadlington's dramatic evidence cast doubt on whether the Royal Opera and Royal Ballet might even remain in operation unless emergency funding is found.
He said: "If we cannot get funds into the Opera House in the very short term then the possibility is that the house could become insolvent. Unless we can find a solution on our own then the house will become insolvent." He said auditors had attended the last board meeting of the ROH, and the house now had to present balanced budgets to the Arts Council by next week. He added that he was talking to potential donors.
The chairman of the committee, Gerald Kaufman, asked if this meant the house could go into receivership.
Lord Chadlington replied: "That is the conversation we are currently having. I believe there is a way through. I believe there is a small opportunity to get through it."
He said the accumulated losses were pounds 4.7m to April 1997. Following poor ticket sales in temporary venues, estimates were a further loss of up to pounds 3m by April 1998, and still further losses in the 20 months up to the reopening of the house.
He added that donors had been ringing up yesterday saying they had given money to one kind of opera house and now discovered it was going to be another kind of opera house.
In his evidence, Chris Smith stressed that his proposals were merely that, not definite decisions, and that he would await the report of Sir Richard Eyre's review committee in May.