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Force India saved from liquidation

FORMULA ONE: The Force India Formula One team will keep its doors open after administrators accepted a bid led by Canadian billionaire Lawrence Stroll to buy the factory and repay creditors.

Formula-One
By Michael Lamonato

Friday 17 August 2018, 09:47AM


Sergio Perez spearheaded the action to move Force India into administration as he was owed more than US$4 million (B133.45mn) in unpaid salaries. Photo: Ferenc Isza / AFP

Sergio Perez spearheaded the action to move Force India into administration as he was owed more than US$4 million (B133.45mn) in unpaid salaries. Photo: Ferenc Isza / AFP

The midfield squad was placed into administration by the High Court of England and Wales on July 27 following an action spearheaded by driver Sergio Perez, who was owed more than US$4 million (B133.45mn) in unpaid salaries.

The Mexican driver’s action, supported by Mercedes and major sponsor BWT, prevented a winding-up petition lodged by a fourth creditor from shuttering the team.

It took just 10 days for the appointed administrators to conclude on a preferred bid, with Lawrence Stroll, father of Williams driver Lance Stroll, emerging as the leader of the successful consortium of investors.

“It is rare that a company can be rescued and returned to a position of solvency,” said joint administrator Geoff Rowley. “Funding to support the team will be made available from today (Aug 7), and significantly more will be available once the company emerges from administration which we expect within the next two to three weeks.”

All creditors will be paid in full and all 405 team employees will keep their jobs. A funding injection will allow Force India to resume developing its car in its battle for fourth in the constructors standings, in which it trails Renault by 23 points.

The sale of the team marks the end of Indian former liquor baron Vijay Mallya’s involvement in the sport.

Mallya had been instrumental in building up Force India from last place in the constructors championship in 2008, the year he took control of the former Spyker squad, to back-to-back fourth-place finishes in 2016 and 2017.

But Mallya became embroiled in financial scandals in recent years that have prevented him from sufficiently funding the team. He is currently fighting extradition from England to India, where he faces charges of fraud and where the banks are chasing him for approximately US$1.3 billion (B43.405bn) in loans. He denies all accusations.

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Several questions remain unanswered for the team going forward. The first is whether it will be entitled to its lucrative share of prize money under new ownership.

Only the company that entered into a contract with Formula One is entitled to prize funds, meaning a change of holding company may invalidate the team’s claim to its fair share.

Unanimous agreement from the other nine teams would allow prize payments to continue, but the German media has reported that Renault, McLaren and Williams are withholding their permission in a political protest against the growing power of manufacturers Ferrari and Mercedes over the sport, with the latter-named company being a close partner of Force India.

There are also questions about the effect the ownership change will have on the driver market, with Lance Stroll expected to follow his father from Williams to Force India, perhaps as soon as the Belgian Grand Prix at the end of the month.

Stroll’s inclusion would displace one of either Sergio Perez, whose legal action ultimately saved the team, or Esteban Ocon, whose contract is part of an engine deal with Mercedes.

If Ocon were to lose his seat, Mercedes could pressure engine customer Williams to take him, but the English team has long fiercely guarded its independence from manufacturer influence.

However, with the loss of Stroll’s substantial financial backing and with the departure of title sponsor Martini at the end of the year, Williams may have little choice but to cut a deal with Mercedes to keep itself afloat.

Don’t forget to listen to Live89.5 each and every Saturday at 9am and 5pm for the Box of neutrals radio show.

 

 

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Foot | 17 August 2018 - 13:55:43

A bigger story would be a pass made on the track among any of the top 5 during a race.

The cars are beautiful, fast, and sexy.

But, the racing is terrible.

Have a news tip-off? Click here

 

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