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Rediff.com  » Sports » Mallya's Force India put into administration; Owes Mercedes 13 million euros

Mallya's Force India put into administration; Owes Mercedes 13 million euros

Last updated on: July 28, 2018 15:02 IST

A source close to the matter told Reuters that the action had been triggered by Mexican driver Sergio Perez, who was owed more than $4 million as part of sponsorship deals brought to the British-based team.

Engine provider Mercedes was due some 13 million euros ($15.15 million), the same source added, with leading sponsor BWT also involved.

There has been speculation within Formula One that Lawrence Stroll, the billionaire father of Canadian driver Lance, is willing to invest in Force India as part of a move for his son from Williams.

Force India's principal and co-owner Vijay Mallya is fighting an attempt by India to extradite him from Britain to face charges of fraud, which he denies 

IMAGE: Force India's principal and co-owner Vijay Mallya is fighting an attempt by India to extradite him from Britain to face charges of fraud, which he denies. Photograph: Jason Cairnduff/Reuters

Vijay Mallya's Force India Formula One team has been put into administration after a court hearing in London on Friday, deputy principal Bob Fernley said.

"An administrator was appointed by the court for Force India F1 this evening," he confirmed to Reuters.

The team's chief operating officer Otmar Szafnauer told reporters earlier that the team might have to enter some form of administration before it could emerge on a sounder financial footing.

Force India are currently in Budapest and will continue to prepare for Sunday's Hungarian Grand Prix, the last race before the August break.

A source close to the matter told Reuters that the action had been triggered by Mexican driver Sergio Perez, who was owed more than $4 million as part of sponsorship deals brought to the British-based team.

Engine provider Mercedes was due some 13 million euros ($15.15 million), the same source added, with leading sponsor BWT also involved.

There was no immediate comment from the team on the details of the case.

The Companies Court had named Force India on a winding-up list of companies, published on the justice.gov.uk website, scheduled for hearings at the London High Court last Wednesday, July 25.

"Within a week or at the most two, our financial future will become more clear and I believe much more secure," Szafnauer said earlier on Friday.

The motorsportweek.com website suggested a 'pre-pack' agreement might have been lined up, with a sale of the business and assets negotiated before the appointment of administrators and the change of ownership following shortly after.

Sources close to the team indicated that was wide of the mark but suggested there were up to five interested parties.

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There has been speculation within Formula One that Lawrence Stroll, the billionaire father of Canadian driver Lance, is willing to invest in Force India as part of a move for his son from Williams.

Stroll has not commented on the reports.

 

Another likely contender is Russian fertiliser billionaire Dmitry Mazepin, whose son Nikita competes in the GP3 support series and is a development driver for Force India.

Szafnauer earlier said he did not know what the outcome would be but acknowledged administration could be one of two potential ways out and "whichever route it is, I think the team will be fine. More than fine, actually".

Perez had described the situation as 'critical' on Thursday, recognising also that his own future remained uncertain.

Szafnauer used similar language on Friday.

"We are just in this critical period, which might last a week or two. We have to keep our heads down, do the best we can here, go enjoy our break, after the test, and then come back fighting thereafter," he said.

Force India's problems are well-documented, with co-owner and principal Mallya fighting an attempt by India to extradite him from Britain to face charges of fraud, which he denies.

A group of Indian banks are seeking to recover more than $1 billion of loans granted to his defunct Kingfisher Airlines.

Mallya has decried a "political witchhunt" and has said he is seeking to sell assets worth about 139 billion rupees ($2.03 billion) to repay creditors.

Force India to operate as normal in administration

Administrators for Force India said on Saturday the Formula One team would continue to operate as normal while future options were assessed.

The team, co-owned by Indian businessman Vijay Mallya, went into administration on Friday after a High Court hearing in London.

"We shall be engaging with key stakeholders on an urgent basis to secure the best outcome for creditors," said the joint administrator Geoff Rowley in a statement issued by FRP Advisory.

"In the meantime, the team will continue to operate as normal, including racing in Hungary this weekend.

"Our aim is for business as usual whilst we assess options to secure the future of the team."

Force India have finished fourth in the championship for the last two years and are currently fifth in a tight midfield battle.

Their drivers are Mexican Sergio Perez and Frenchman Esteban Ocon, who is backed by engine provider Mercedes.

A well-placed source told Reuters that Ocon, who has been linked to a move to Renault, was now a free agent under the terms of the administration.

The legal action was triggered by Perez, supported by Mercedes and sponsor BWT who are all owed millions by the Silverstone-based team.

The racefans.net website cited court documents in which Perez's legal team claimed Force India "is or is likely to become unable to pay its debt" and its parent company "are unlikely to be able to provide financial support".

FRP Advisory LLP are the same firm that acted as administrators for the now-defunct Manor Formula One team, which folded before the start of the 2017 season.

Force India's problems are well-documented, with team principal Mallya fighting an attempt by India to extradite him from Britain to face charges of fraud, which he denies.

A group of Indian banks are seeking to recover more than $1 billion of loans granted to his defunct Kingfisher Airlines.

Mallya has decried a "political witchhunt" and has said he is seeking to sell assets worth about 139 billion rupees ($2.03 billion) to repay creditors.

In a letter to Force India employees, seen by Reuters, Mallya confirmed Perez had filed the petition, with BWT stating that their sponsorship amounts were only loans.

Mallya also identified the largest creditor as the team's own holding company which he said was owed 159 million pounds ($208.43 million) compared to the largest of the smaller creditors being owed less than 10 million.

Mallya, who is currently unable to leave Britain, said both he and his deputy Bob Fernley remained in their positions.

Source:
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