The twists and turns in the current mess that is the Caterham F1 Team continue, with reports emerging overnight that the team’s administrators, Smith & Williamson, have locked staff out of the team’s Leafield headquarters while it continues to negotiate a settlement to prevent the entire team being shut down.
It is a remarkably short-sighted move. An administrator’s job is to run an insolvent business on behalf of its creditors while future options are being worked out, and unless the situation is resolved by Friday, the team will have no hope of being able to make it to Texas for next weekend’s United States Grand Prix.
Stopping the staff from working on the cars and preparing them for the next Grand Prix is not the solution, even if there are ongoing questions about who owns what. Those questions are irrelevant if the team cannot attend any one – or all – of the final three Grands Prix, which could prove the difference between it finishing tenth or last in the Constructors’ Championship standings.
Finishing last for two years in a row would be the final nail in the coffin for the team – it would lost about $90 million in much-needed commercial rights revenue – and while it is unlikely to succeed in its attempts to overtake tenth-placed Sauber, it certainly won’t have a chance if it’s missing in action altogether.
“If you agree to buy a business, you must pay its bills. They have breached that promise.” – Tony Fernandes, Caterham F1 Team founder
“[We have] total comtempt of Mr Fernandes and his Group executives with whom we entered a deal in good faith.” – Engavest’s response to Fernandes
While all of this is happening, former – or current, depending on who you believe – Caterham team owner Tony Fernandes has issued his first official response to the claims laid against him by the team’s buyers. They claim that the airline magnate has failed to transfer the shares in the team to them, a claim which he disputes.
“In June 2014, I decided, together with my co-shareholders, to sell my stake in the Caterham F1 team,” he said.
“We agreed in good faith to sell the shares to a Swiss company named Engavest on the basis that Engavest undertook to pay all of the existing and future creditors, including the staff.
“The continued payment of staff and creditors was so important to me that I ensured that the shares would not be transferred to the new buyers unless they complied with this condition.
“Sadly, Engavest has failed to comply with any of the conditions in the agreement and Caterham Sports Ltd [the UK operating company of the F1 team] has had to be put into administration by the bank, with large sums owing to numerous creditors.
“Our agreement with Engavest was very clear: there was no legal obligation to transfer the shares to them unless certain conditions – which included paying creditors – were met. Those conditions have not been met.
“Our lawyers have asked Engavest several times to comply with these conditions but they have failed to engage. If you agree to buy a business, you must pay its bills. They have breached that promise and now, sadly, it is others such as the employees and the fans of the Caterham F1 team that will suffer if the team ceases to race.
“I sincerely hope that this will not be the case and that a solution can be found.”
Predictably, Engavest has rejected those claims and issued their own response via the Caterham F1 Team’s media department.
“On 29 June 2014 Engavest SA signed a Sale and Purchase Agreement with Tony Fernandes and the Caterham Group to acquire the shares of 1Malaysia Racing Team/Caterham F1. Engavest SA has fulfilled all the conditions precedent, including paying the purchase price for the shares. The shares have not been transferred and therefore Mr Fernandes remains the owner of Caterham F1 and is fully responsible for all its activities,” it said.
It then went on to issue a further press release disputing Fernandes’ claims, which read:
“Engavest SA, strongly refutes the allegations of Tony Fernandes and Caterham Group CEO Graham Macdonald regarding its conduct while trying to purchase Caterham F1. Our statement of earlier today still stands.
“Every single condition precedent of the Sales and Purchase Agreement for which Engavest was responsible has been met. Only the seller, which includes Mr Fernandes, failed to meet his obligations. All salaries have been paid.
“The claims of Mr Fernandes and Mr Macdonald contradict their own press statement dated 03 October 2014:
“Caterham Group wishes to clarify that, following the sale of the F1 business in July, it has no affiliation with Caterham F1 Team”.
“That one sentence alone contains two errors:
- the date was June 29
- having failed to transfer the shares Caterham Group and Mr Fernandes wholly owned Caterham F1 at the time of the statement, as they do today.
“Incidents such as a Caterham Group representative forcibly breaking into a filing cabinet containing our private and confidential documents and the continued refusal to deal with the outstanding loan of Exim Bank and complete the agreement has culminated in Engavest’s total comtempt of Mr Fernandes and his Group executives with whom we entered a deal in good faith.”
There are two distinct versions of the same story.
The lawyers will ultimately have to sort out who is right and who is wrong, but someone needs to step in and get the show back on the road or the team will be finished.
The only thing the administrator has achieved so far is to push away the people trying to save the business, and send the entire saga back to the man who clearly wanted nothing to do with his own team at the start of the year.
Images via XPB Images