There are problems developing between the defunct HRT team and some of its suppliers with Formtech Composites Ltd going public about HRT’s plan to pay only 30 percent of the money owed.
Formtech is also complaining that ownership of the company had been transferred to a Luxembourg fund, making it difficult for creditors to chase those responsible.
Formtech says that is making the problems public “in order to keep business standards to a civilized level within the motorsports industry”.
The news follows unpleasantness in Madrid when the HRT race team returned from Brazil.
joeblogsf1 
This is not a very honourable way to conduct business especially in a very hi profile sport. Bernie might not lose any sleep over this and maybe im wrong in thinking this, its not Bernies business.
It has nothing to do with Bernie.
Joe the weather is terrible in New Zealand today , can we blame Bernie for this.
Sure, why not. It’s bound to be his fault.
Yeah… and I have an ache that just won’t go away… Bernie???
will HRT’s spots on the grid be transferable to any other entity who may wish to acquire them or do they just disappear? i’m not suggesting that someone buy the team, just take over their entries. i know this may not be practical for 2013, but i’m curious if it is possible.
No
Seems to me their main focus was just to finish the season and hope someone would bail the team out.
Did the team members get paid?
In most jurisdictions, employee back salary takes priority over all other creditors. An auction of the remaining stock and facilities would – more than likely – put employees very first in line.
A transfer of the corporation to Luxembourg could be an attempt to interrupt this typical state of disbursement, but I cannot imagine the Spanish authorities would look upon it kindly. Most governments don’t mess about with back wages. Given the high profile of F1 teams, one doubts such a strategy would easily get them off the hook for owed wages.
Unless they haven’t been paying salaries for a very long time, wages are probably not even a large proportion of the team’s debts, suggesting this is an attempt to put off certain non-employee creditors.
In most jurisdictions, monies owed to the government, such as tax liabilities, take priority over all other creditors.
That’s not true in the UK; so-called Crown Preference was abolished some years ago.
Not entirely unexpected after the problems earlier, but they must be pretty broke to go to those kind of lengths.
Give me the tobacco companies over financial institutions any day. Smoking is voluntary – you light a cigarette, you know what you’re getting into and, like many of us have, you can quit when you’re ready – and I don’t recall Morris or BAT wrecking the world’s economies.
Actually they have contributed to “wrecking the worlds economies”. Do you have any idea how much money governments have spent for those in poor health due to smoking? Not to mention lost productivity. One reason why governments got involved in the first place and banned cigarette advertisements in sports. Maybe not as directly as the banks, but in a much more sinister and round about way, and I’m sure those governments would like to have the money back.
Just a figure to think about: The total annual public and private healthcare expenditures caused by smoking-related disease and disability is at least 75 billion dollars. Annual Medicaid payments total $23.5 billion , with the federal government share being about 57% and the states paying 43%. The federal government also pays at least $20 billion per year in smoking-related Medicare costs. An additional $8billion in smoking-related healthcare costs is paid through the Veteran’s Administration health system.4
– See more at: http://www.ispub.com/journal/the-internet-journal-of-health/volume-3-number-2/financing-smoking-related-illness-and-smoking-cessation-can-it-be-done.html#sthash.z7Nmm066.dpuf
Just think how much more it would be if the US had a decent, free, open to anyone, health care system. One can dream eh?
Do you have any idea how much money governments have spent for those in poor health due to being fat or being in a road accident?
It is legal to smoke and it is disgraceful that the industry is not allowed to advertise. If you apply the same logic to other industries, all food companies should be busted for feeding people too much; car companies should be busted for providing vehicles in which people crash. It is all bull. The governments all take vast sums in tax from the tobacco people, not to mention subsidising the growth of the stuff in many countries, it is just playing to the do-gooder voters – and lining the pockets of lawyers.
Agree Joe – but of course its the statistics that are always trotted out every time to make a point against smoking. Yet statistics, as we know, can be twisted to suit any viewpoint, eg, as smoking gains popularity, average life expectancy has increased..! Or what actually is bad for you is speaking english..
But I digress. The demise of HRT is unfortunate for all concerned, but the trade creditors should have been more careful in giving credit to an obviously struggling business.
I agree, although amusingly the ban on tobacco advertising saves the industry a fortune as they don’t have to spend billions on a perpetual advertising arms race against one another. Smokers will still smoke, and they pick their brand.
Both cigarettes and motor cars, if invented today, would never be allowed. But in both cases it’s too far gone; cigarettes are too lucrative (I’m think the tax profit outweighs the burden on the NHS, even before you factor in the reduced state pension outlay) and cars are too essential to be taken away.
My thoughts exactly in regard to inelastic demand. In the US the tobacco companies have been saved a large fortune by government requirements for health warning labels on the products. Because there are warning labels, the tobacco companies can’t be (successfully) sued for damages caused by use of the product. And the government still gets their taxes; sweet deal for both parties.
Oh dear! are you talking out of your derrière Joe?
I have no idea to what you are referring.
Interesting side topic. Was it not true that F1 teams ‘agreed’ to remove tobacco sponsorship in a meeting held on that infamous day, 11th September 2001. All but one agreed to do so, guess who? Good day to bury bad news maybe. Let’s be honest tobacco sponsorship is alive and well and still flaunted by the cars in red so to say it is not allowed to happen is misleading.
After walking my then 5 year old daughter through the public enclosures at the British Grand Prix in 2006 and seeing subliminal promotion of cancer sticks to all and sundry I beg to differ and believe the sport is benefitting from its absence. I agree that there is an argument to allow freedom of choice but such is the ‘passive smoking’ effect that this is a different case. Alcohol, food or even drugs taken to excess are in a different category IMO.
“If you apply the same logic to other industries, all food companies should be busted for feeding people too much; car companies should be busted for providing vehicles in which people crash.”
You really can’t see the differences? Well, you are entitled to you opinion. But it is tosh.
No I do not see a difference. And if you think that is tosh then I’d love to know why I should listen to you.
Indeed. He doesn’t agree with you, so why should you listen.
Quite typical of yourself, oh well, at least your good enough at your job to be able to get away with such arrogance.
Guessing this is just a personal message eh Joe? This won’t be seeing the light of day in the comments section. Yes, I’m aware of that little trick as well 😉
Indeed. You don’t agree with me, so this gives you the right to be unpleasant and call me arrogant?
No, I fear it does not.
If I consider that you are a just a troll, who is not contributing anything to the intelligent discussion and, in fact, is detracting from it with smart-arsed remarks, then I will do as I please. My house, my rules.
If you don’t think I know what I am talking about then that is fine, go and read someone you like better. I am not holding you to ransom. I am trying to explain the sport at no cost to you – and at no gain for myself. I do it because I want to share my passion.
Your ability to guess things is not up to much either. Look here is your comment – in all of its “glory”.
So no tricks.
If your comments do not get published there is a good reason for it.
Prestie…Prestie, why did you carry them on the cuff for soo long? You should have seen this coming my friend and forced them to pay up.
Originally I thought it was admirable that Thesan wanted to close down HRT without debt. What they meant was that they’d offer 25c in the euro to be debt free. Not really the same thing is it?
Joe – could the Mechanics Trust assist some of the ex-HRT employees?
Maybe thats why some team members were so unhappy, they only got 30% of their severance.
I bet salaries went unpaid too. What is it about some companies that think they can just cut their losses and not pay salaries or contractors. The creditors new to stand up to them.
Is this HRT’s doing, or the work of liquidators? When the latter get involved creditors usually get a slice of the pie, but seldom everything they are owed.
I understand that all Team Members were paid in full within a week of the Brazilian GP!
Of course Formtech, who have a close relationship with Holzer and Mr Kolles, could have another agenda here!
That being said Thesan Capital aren’t exactly blameless in the whole situation, by a long way!!
Rich people that can afford to pay the bills and still live well in not paying bills due to greed shocker…. If they’d run out of money half way through the season you could maybe understand it but it was a controlled and planned shutdown, to not pay your bills in that situation seems like a fraud to me.
I don’t think that is fair. I think that they went on hoping that they would find money until it reached the point of no return.
I respect your opinion Joe, and I have to admit that pretty much anything I know about the HRT situation I got from your blog, but if they’re owned by people that were trying to recoup their initial investment and then those people decide to cut their losses then I in my opinion they should cut their losses in such a way that their supplier bills and staff redundancy payments are actually paid. I’m sure the money is there somewhere.
I agree entirely. It is pretty scummy to kink the people who have helped you stay alive.
When you’re fighting for financial survival, you tend to clutch at straws, look for offers that perhaps aren’t there in reality and try to keep the balls in the air while searching for funding.
It’s not a good position to be in, as you look at your debt and your shrinking cash-flow and realise that it isn’t going to get better any time soon.
I’d like to think that there wasn’t a deliberate attempt to duck responsibilities by the team owners, but the facts don’t look too good.
Why don’t they sell their motorhome? Its worth about $10-15 million and probably the only fixed asset they posses.
No, they have a wind tunnel. And a factory. I am not sure if they own the land on which the factory is built.
Yes, that’s why I didn’t say factory. US F1 team also sold their assets on e-bay to pay off debts and fine.
BTW can you tell me how much money they need to pay to creditors and staff for shutting down the business?
I have no idea.
There were some Brawn GP transporters sold oneBay at the end of the 2009 season just after the deal to become Mercedes was done.
Motorhome & wind tunnel, are we still talking HRT here?
I understand the catering company own the motorhome structure and the team rent a part of a big building.
The only assets they have are what you see at a European race, motorhome aside.
I don’t think that is right.
Yes but where are the cars? The cars must surely have some value, unless the composites maker and engine suppliers are asserting liens for payment.
The cars have little value except as museum pieces, given that the team’s 2013 F1 entry no longer exists.
Jo, the Motorhome structure is owned by Komodo, the catering company, or certainly was throughout the season. The section of the Caja Majica building that they occupied is rented from the Madrid local government, so I am led to believe, I fully accept that info could be incorrect….
When answering the question I thought the conversation was about Force India. All the comments come up in a long list for me and it was in amongst the Force India stuff. I am happy to accept that you may be right about HRT. However, when it comes to attention to detail, it is always best – for the sake of credibility – to get the name of the host right! Joe
Their actual F1 cars must be worth a few quid?
Not really.
Joe,
I apologise for that, I assure you, it was finger trouble! It does happen in Motorsport….