Burdened with a $2.3 million deficit, the 44-member Dance Theatre of Harlem has canceled its 2004-05 performances, the company announced yesterday.

The "hiatus," as founder and director Arthur Mitchell called it, leaves the Kennedy Center scrambling to find a replacement for the ballet troupe's scheduled week-long appearance in January. Performances of the ballet "St. Louis Woman" were to have been part of the center's ballet subscription series as well as an element of the landmark "A New America: The 1940s and the Arts" festival.

Dance Theatre was to return here in April for the Kennedy Center's "Masterpieces of African American Choreography" program. The center will not seek a replacement for those appearances, President Michael Kaiser said yesterday, because 16 other companies are already booked for the five-day series of shared programs. Finding a ballet company on par with the Kirov and the New York City Ballet that also happens to be available Jan. 25 to 30, however, will be "a challenge," Kaiser said. And given the last-minute nature of his search, he added, the substitution almost certainly will not fit in with the 1940s festival.

Kaiser has been advising Mitchell on how to restructure his 35-year-old company. Arts administrators and funders have long called for Mitchell, who is widely seen as a micromanager, to acknowledge that his troupe needs sound financial leadership. As recently as June, Mitchell was publicly denying rumors of an imminent shutdown.

Yesterday, a combative-sounding Mitchell defended his decision and described it as a temporary regrouping. "There is no shutdown," he said from the company's headquarters in New York, noting that the troupe's affiliated school will remain open. "Right now is the most opportune time for us to stop and address these things. We didn't have [performance dates] in the fall and really weren't going to go any place until January." The troupe will dance as scheduled next week as part of a festival at New York's City Center.

Financial troubles have plagued the company since its inception, reaching a boiling point last spring when news broke of the deficit and of an exodus by board members. At the time, Mitchell had been planning to hire Janet Boateng, wife of a British cabinet minister, as executive director. These plans have been scrapped, he said yesterday.

"It just wasn't the right mix," he said. "It's different working here versus working in England."

Mitchell would not say whether there were any other candidates for the position. He insisted that the company would dance again in future years and that he would erase the deficit by mid-November, though he would not say how this would be accomplished.

"Now once the word is out, someone may say, 'Oh, I want to give you money for the company,' " he said. "Why would you want to give money to something that's shutting down?"

Director Arthur Mitchell says the troupe is on "hiatus" this season.