The Force India F1 team has been placed in administration by the High Court in London, which has appointed Geoff Rowley and James Baker of FRP Advisory to oversee the sale of the team as a going concern.
The process will allow the team to operate over the remainder of this weekend’s Hungarian Grand Prix. Baker and Rowley – who previously oversaw the administration actions applied to the Marussia and Manor F1 teams – will work to secure the sale of the team during the mid-season summer break.
The Silverstone-based team has been in an increasingly worrying financial position this season, which driver Sergio Pérez described as “critical” when it emerged it couldn’t afford to bring new development parts to its VJM11 challenger.
It owes money to a number of creditors, with the most significant being Mercedes-Benz over unpaid bills for the supply of engines and gearboxes. Other creditors, according to documents presented in Friday’s application hearing, include Pérez and title sponsor BWT.
The Austrian water company, which has its own association with Mercedes-Benz, provided its sponsorship in the form of convertible loans, named because its investment can be converted into an increasing equity stake at some point in the future as the loan interest accrues.
The administration action was triggered by Pérez;s management team, claiming the Mexican was owed $4 million. The action was supported by Mercedes-Benz and BWT.
Friday’s hearing was adjourned midway through proceedings when the British company Rich Energy – a little-known drinks start-up which has been among a number of groups linked to a buy-out of the team – presented a sponsorship contract suggesting it would provide a £30 million injection over the next two years.
The presiding judge rejected the offer as a viable means of saving the team and placed the team into administration on Friday night.
There are believed to be up to four potential parties in contention to purchase the team and with team principal Vijay Mallya now no longer in control, the administrators may be forced to accept an offer well below Mallya’s asking price – rumoured to be over $250 million – to keep the team going and gets its debts paid off.
What changes take place during the three-week break until Formula 1 returns to competitive action in Belgium remains to be seen, although a number of driver line-up changes could well take place.
Pérez’s teammate Esteban Ocon is a Mercedes junior driver and his contract could well be bought out by rival manufacturer Renault, which is keen to have a French driver in its line-up. If this occurs, Ocon will replace Carlos Sainz Jr., who it is claimed could in turn jump ship to McLaren and replace Stoffel Vandoorne.
Ocon’s seat could be taken over by Lance Stroll, whose father Lawrence has bankrolled his motorsport career and is reportedly keen to see his son move away from the struggling Williams team. That deal could be negotiated with the administrators in the form of more convertible loans which Stroll Sr. could cash in when the team is sold.
Image via Sahara Force India F1 Team