Force India enters Adminstration with reported debts of in excess of £100 million
30 July 2018
Estaban Ochon finished 13th in the Hungarian Grand Prix for team Force India which entered Administration last week with estimated reported debts of in excess of £100 Million. Will this prove to be lucky or unlucky 13? Only time will tell as the Administrator of the company behind the formula one team seeks a new investor to buy the team and keep it running as a going concern.
A few things that we can take from this story. All that glitters often is not gold. From the outside Force India were a successful Formula One team playing with and surrounded by the world’s wealthy elite, but behind the scenes debts were mounting. Mercedes their engine supplier was owed in excess of £10 Million and their big name driver Sebastian Perez was one of the Creditors behind the Administration Appointment claiming over £3 Million in unpaid wages.
Even in what might seem the direst of situations, restructuring is possible and often successful. Insolvency Proceedings can seem a bit of a merry-go-round in Formula One. In recent years we have seen the likes of Lotus, Catherham and Marussia seek protection in Administration. Often most a successful team has come out the other side and jobs have been saved.
The public perception of being one of the people responsible for placing a business into Insolvency Protection in Administration remains that of the “bad guy”. Perez had to come out through his agents and explain to the media that as a creditor he was applying to the Court to save the business and the associated jobs. He was not seeking to hold them over a barrel to extract his unpaid wages. There is still a way to go to educate the media and the general public of the good that can come from a restructuring through Insolvency.
In certain perhaps more astute parts of the motoring press it has reported that Force India deputy team principal Bob Fernley believes the process will have a positive outcome because a suitable buyer can invest in the Formula 1 team's future. After Friday evening's High Court decision in London, administrator Geoff Rowley and his firm FRP Advisory are now running the team using independently sourced funds that are sufficient, for example, to allow it to pay staff salaries next week.
It is reported that Administration is viewed positively within the Force India camp because it allows the Administrator to properly assess potential buyers, with more than one candidate having been in discussions in recent weeks.
Clearly the Administration allowed them to take part in the Grand Prix in Hungary and not without a degree of success with both drivers finishing well up the order. This may yet end up one of this year’s happier Insolvency stories.