As previously reported there are problems between the buyers of Caterham F1 and the team’s previous owner, a company that involved Malaysian airline magnate Tony Fernandes and others. The new owner – known at the time of the purchase as Engavest SA – says that it agreed terms with the previous owner at the end of June to take over control. However they now say that the seller has refused to comply with its legal obligations to transfer the shares to the buyer. The team says that it has been left in “the invidious position of funding the team without having legal title to the team it had bought”, which it says is in contradiction to a recent press release which stated that the Caterham Group no longer has any connection with the team. Administrators have now been appointed on behalf of Export-Import Bank of Malaysia Berhad (Exim), an organisation with which the buyers have no connection. The team says that appointment of the administrator has had “devastating effects on the F1 team’s activities” and have made statements that have been “severely detrimental to the management of the team”.
The buyer is now saying that it is looking all options, including the withdrawal of the management team and have instructed lawyers to bring
“all necessary claims against all parties, including Mr Fernandes”.
What happens next remains to be seen but if the team is to make it to Austin, immediate action is required.
The key question, of course, is why the shares were not transferred to the new owners. The only logical explanation is that they were pledged in exchange for loans and could not be signed over until loans were paid off.
For the moment the team remains a party to the F1 agreements, as the entry belongs to the Malaysian company 1Malaysia Racing Team. If this entity goes into administration then the team loses all of its rights and benefits. However if the operational arm of the team – Caterham Sports Ltd – goes out of business the assets could be sold to another party and this could take over the running of the team. However there is not much time to do this and there are probably legal hurdles to be overcome. The team can miss a race if it is necessary, but all rights and benefits disappear if the teams misses more than three races in the same year. Thus, in theory, Caterham could miss the final three races of the year and still be considered an active F1 team.
However, it is currently 11th in the Constructors’ Championship and will suffer a huge drop in revenues next season as a result of finishing outside the top 10 in two consecutive years and so it is in the team’s interest to be at the races if it is possible, just in case there is an opportunity to move up to 10th
While the new management has taken a lot of criticism for its handling of the situation, the new claims put a rather different spin on the problems. We await a reaction from the previous owners…
joeblogsf1 
Just painful to watch from the outside and here we all thought it would be Force India in this position……. Force India seem to be OK, but maybe it is like a duck, all appears fine on the surface, but underneath a lot of frenetic activity just to keep moving in the right direction
There is frenetic activity happening in a number of places at the moment. Still, let us hope that the problems can be solved, all the necessary equipment released and the team allowed to keep going. If the administrators want to move the team forward it is not logical to stop it racing. That will kill it and the sale of assets etc will not get much money for the creditors so it is in the interest of everyone that the team turns up in Austin. If these problems can be solved, one would expect investment to then arrive and the team can move forward. This really in the only choice as clearly the former owners do not want the team back.
Joe, in the past when a team may have been strapped for cash, Bernie may have stepped in and provided a loan for a team to continue operating. Is this an option or is he not too concerned about the fate of Caterham
I doubt it, but Bernie would be dealing with 1MRT not Caterham Sports
Don’t the cars and kit have to get on the F1 plane at some point? How does the transport thing work?
I think a lot if the equipment has gone directly to Austin but I’m not quite sure on that. I’m sure someone can tell is that.
Hopefully the team will race in Austin. One of its sponsors is Dell, which has its HQ in Round Rock, close to Austin. The company will have a hospitality presence at the race so hopefully its sponsored cars will be on track.
I recall reading earlier Dell wants their computers returned.
dell visited at least 3 teams over the late summer to discuss potential sponsorship so I think that ship has sailed…
How distressing. It seems one thing after another at the moment in F1.
Maybe now is the time for Mr Fernandes to exit professional sports ownership.
I fear for QPR fans as well as everyone involved in Caterham.
I can also see many painful lawsuits on horizon
Bar Brabham in 1988, I can’t think of a team that stopped racing and resumed thereafter. So if Caterham miss any of the last races, logic says that’s their lot. Which would be very sad.
Alfa, BRM, Cooper, Honda, Lola, March, Renault spring to mind.
Most of those had something to do outside F1 – even Brabham kept itself busy building Alfa’s Procar prototype. This F1 team doesn’t have any other income streams afaik.
Nothing from Tony Fernandes’s end. The silence is not a good sign. I am just worried for the good people working currently with them. Pay checks, hopefully are reaching them on time. How this will effect Status grand prix’s purchase of the GP 2 team, is anybody’s guess. He is also trying to expand his airline in India as well. Wonder where he will get the funding from ? His India operations CEO is a flashy personality, having no real aviation business experience. Did he have the right people managing the f1 business. Such a waste….
He’s now replied on twitter “If you buy something you should pay for it. Quite simple”
Sounds like they’ve had the usual issue seen by smaller teams in F1. Investors with ambition but no money
Meanwhile, the FIA continues to sit on its hands for failing to deliver the promised Formula $50million.
I fear we are now entereing the beginning of the end of F1. I think implosion is more likely than an FOM IPO.
The IPO has not been a real option for a long time. The sale price has to come down. It is doing so all the time…
Interesting tweet from Tony Fernandes just now “If you agree to buy something you should pay for it. Quite Simple.” He has apparently told Andrew Benson that the Caterham statement is rubbish. It all seems very inflammatory and at face value not helping what is a very challenging situation for the team members get any better.
There must be paperwork which explains what was bought and what was not bought. I doubt that the buyers paid more than a dollar for the team so the question of what was paid must relate to what was included in the purchase. This must all be written down as well. Somebody therefore is at fault and there must be paperwork showing that.
With you on that Joe my guess is they bought the debt and entered in to some kind of arrangement to operate the F1 entry under licence with some sort of future plan. I know what I would do if I was the bank that presumably controls the shares, now that it seems that technically Tony Fernades or whoever or whatever corporate entity previously controlled the various Caterham F1 companies…. I’d be asking for the shares of the road car company to secure the whole lot. That’s assuming they are not already in the possession of lenders.
I’m not blowing sunshine at you Joe, but you’re too modest I’m sure to point out this is by and large what you’ve been hinting at, shares wise, since the beginning. Complex, dreadful and based on this info, terminal.
I remember when this team came into the sport, and having a thing for the underdog (and being a fan of the Rottweiler) I wholeheartedly supported them when the cost controlled formula they were promised fell apart and the nonsensical fight over the ‘Lotus’ name was filling pages of bad press for all involved. I had the opinion that Tony Fernandes had was an honorable guy who through no fault of his own got a pretty poor deal? If the current state of affairs turns out to be a result of his ‘cut and run’, actions I’m going to have to assume he has adopted a Mallyaesque attitude to the whole thing and placed the future of several hundred employees in the ‘things that dont matter if I refuse to acknowledge them’, pile? Sorry state of affairs!
Yes it would have been good if MG had succeeded and it looked like he might have done to start with. However the situation now looks to me a case of several parties working together on the inside, while appearing to be in conflict on the outside, and both likely to benefit financially from acquiring the debt which has a tax value. I don’t believe that TF & the Romanians are at loggerheads, there is more to this than meets the eye I’d bet.
Who are the Romanians?