Sergio Perez, Force India, Silverstone, 2018

Perez behind legal proceedings to put Force India in administration over $4m debt

2018 Hungarian Grand Prix

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A company linked to Sergio Perez brought an application for administrators to be appointed at his Force India team due to an unpaid debt, RaceFans has learned.

The Silverstone-based Formula 1 team has been placed in administration and will continue to operate in the meantime.

Multiple sources confirmed to RaceFans the Guernsey-based Brockstone, which is linked to Perez and his manager Julian Jakobi, initiated legal proceedings.

Jakobi refused to comment on the development. Perez, who yesterday described Force India’s financial situation as “critical”, did not take part in a scheduled media session at the Hungaroring this afternoon.

Perez’s legal team told the court on Wednesday that Force India “is or is likely to become unable to pay its debt” and its parent company “are unlikely to be able to provide financial support”, according to documents seen by RaceFans. He is seeking payment of over $4 million (£3 million).

Appointing administrators ahead of the F1 summer break is intended to minimise disruption to the team, allow it to continue operating will give it the best chance of being able to repay its creditors.

The application was also supported by the Daimler/Mercedes group, which Force India owes over €10.5 million (£9 million), and sponsor BWT. The latter alleges its sponsorship deal with Force India was in the form of a loan.

As RaceFans revealed earlier, Force India development driver Nikita Mazepin’s father has been in talks about investing in the teams. Three parties are believed to have expressed serious interest in the team.

Richmond-based energy drink company Rich Energy is not thought to be among them. The company announced on social media it had offered a “last minute £30m injection” into the team. “A tragic and avoidable outcome orchestrated by Mercedes, Checo Perez, Julian Jakobi and BWT. Disgraceful.”

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Author information

Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...
Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...

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  • 93 comments on “Perez behind legal proceedings to put Force India in administration over $4m debt”

    1. Boy, things are baaad! Hope we get an announcement soon about Force India’s future, and that they can keep going, because they have been doing a terrific job for a long long time!

      1. The trouble, is VJ has been living beyond his means. VJ has the sole distribution rights for a large alcohol company, for his native country, and because of his lack of tax payments, has landed him in trouble- hence the request for his extradition from the UK.

        1. Further background and detail to this story in the latest edition of Dieter’s Paddock Diary, which has just gone up:

          https://www.racefans.net/2018/07/28/paddock-diary-hungarian-grand-prix-day-two/

    2. Perez surely doing this will do more harm to your career than just getting on with it and trying to help them find a good buyer

      1. Indeed. Ferrari was maybe thinking of getting Perez, but now they’re like “aw, this guy wants to get paid what his team told he’d get paid?! We’re not hiring him now!”

        1. Irony and sarcasm are hard to detect online; sometimes :)

        2. My thoughts exactly. A company should pay it’s employees and suppliers as a top order of business.

          1. This reeks to me of a way for the final purchaser of the team to get a lowball price. Any shortfall (from the real value of the team) will be borne by all creditors, large and small (after the administrators gouge a hole for themselves). If Perez ends up driving for them (Stroll?) then he’s also morally responsible for that pain.

      2. Perez is already owed 4 million dollars by Force India, so why would he invest at this point? If he were to say “alright, I wil forget about that 4 million you owe me, I will sign a 1-year contract for a team I don’t know will still be around next year, my sponsor will pay you guys in advance, have a nice day”, chances are he will be in the exact same situation in 12 months’ time, if not worse.

        It’s not a game, when there are millions of dollars on the line you can’t be friendly anymore. Perez is playing it sensible, you simply can’t blame him for that.

        1. They’re forcing Vijaya to sell the team, at some point he will not have a choice. I think it’s good for FI.

        2. @andae23 I fully agree with you.

      3. People are angry at Checo, but if your boss didn’t pay you for four months, you’d probably seek legal action too! Or not show up to work.

      4. Perez suing them though is it, its some company that sponsors him. akward

    3. I have to think Perez is leading his sponsors into an attempted takeover using the debt as leverage. The BWT money actually being a loan rather than sponsorship is interesting too. I don’t know how English bankruptcy works but sounds to me they had a convertible note and chose to remain as a creditor should something happen. This situation will only get more convoluted and risk their future if the team is not sold quick.

      1. There are strong reports in the German press that Lawrence Stroll has already agreed to buy Force India, but things were proceeding too slowly for his liking. Perez suing them (along with some reports saying that Mercedes have also demanded payment for their engines, which are also behind schedule) triggers the administration which makes the sell-out to Stroll easier. He takes over the team, keeps on Perez (who has helped him out, after all), moves over Lance and rebrands as Stroll Racing, with his son in one race seat, another North American driver in the second seat and an experienced team with good form still in working order (depending if the move doesn’t cause half the team to quit, which seems unlikely).

        Ocon to Renault, Sainz back to Toro Rosso (but he might have a shot later at Haas, depending on what happens with Grosjean), Hartley to, er, unemployment. Kubica then into the Williams seat?

        It’s all a bit Game of Thrones, with Perez as the assassin.

        1. Hold on… Keeps Perez, moves over Lance and adds another North American driver? That’s one driver too many.

          1. Perez is the north American driver

    4. Miltiadis (@miltosgreekfan)
      27th July 2018, 21:48

      Thats a first in F1 community! Many drivers have their salaries cut, stayed unpaid(Kimi in Lotus 2013) or payed later than the contract says, but its the first time a driver & his management do a whole of legal procedures, in order to shut down the team where he races!

      1. @miltosgreekfan, as a broader aside, I might be mistaken, but I believe that Kimi did threaten legal action against Lotus as the relationship between him and the team soured in late 2013, with a deal eventually being agreed between the two before the case came to court. It was suggested at the time that Kimi’s absence in late 2013 was, rather than being due to a “back injury”, a result of Kimi refusing to race after arguing that Lotus had breached their side of the contract by not paying him.

        Similarly, I believe that although Hulkenberg did initially defer payment of his salary whilst at Sauber, I believe there was talk that he did eventually also threaten legal action against Sauber when they kept delaying payments (and, once again, the case was settled before it could get to court).

        Of course, there was also the legal action that van der Garde launched against Sauber for failing to repay the payments he’d made to the team as part of a deal to race for them that they later backtracked on.

        If you want to go further back in time, there was also the case of Heinz-Harald Frentzen suing Arrows Grand Prix in 2002 for non-payment of wages in a lawsuit which contributed to the collapse of the team, with Jos Verstappen also suing Arrows that year as well for loss of earnings.

        Overall, there have been quite a few drivers who have threatened to sue, or have sued, their current or former teams and either pushed the team to the brink of financial ruin or ended up putting them into bankruptcy proceedings.

        1. Miltiadis (@miltosgreekfan)
          28th July 2018, 7:03

          @anon In recent years, drivers did it mostly as a way of getting their money without actually wanting/trying to have the team collapsed. Or at least this is how i see it, as we never had a team getting into administration due to a driver(i’m not reffering to Arrows, as i dont have enough details for them).
          Van der Garde was a different case, as there were 3 contracted drivers for 2 racing seats.
          Here, the money that F.I owes to Perez & sponsors are a big amount,no denial to that, but with the rumors of new buyers , i thought that everything would be calm, at least till Sunday evening.
          F1 is a big business,so its difficult to fully understand what is going on behind the scenes!

          1. With Van der Garde, he and Adrian Sutil had a contract to race for the team, but miss Klatenborn also signed Nasr and Ericsson for there money, when Guido won in court, Miss klatenborn had set the team against Van der Garde, so eventually he and Sutil went to court to get there money back

    5. Good luck finding a team next year (or any year for that matter)

      1. Lucho Adriano
        27th July 2018, 23:54

        So, you work for free and with unpaid salary? Great, i want you to work in my company.

      2. I guess he is looking for a team takeover from a group where he is part of. He has strong financial backup with the Slim family behind

      3. Dean Zafirov
        I disagree. The whole point of a contract, is that both sides respect it’s terms, and their obligations. Perez, like most drivers, has a contract with his backers, and can’t just say, ok, slap on the wrist, and pay me when you can. After all, what guarantee is there that he or any the others owed monies will be repaid, if FI go bankrupt. Would Mercedes have agreed to this if they were confident of been paid? Not likely. All those owed money, want to minimise their exposure, and with VJ Malaya involved, who can blame them.

      4. @jjlehto Williams won’t complain

    6. Adam (@rocketpanda)
      27th July 2018, 21:59

      Whaaaaaaaat!

      1. Adam (@rocketpanda)
        27th July 2018, 22:39

        I’ve got to ask because I don’t understand too well – does this mean that the team has been put into liquidation? How is this going to affect the coming race, as in are they even going to be allowed to drive? Is this pretty much the beginning of the end for Force India?

        I mean, if they owe Mercedes 10m, Perez 4m, and their BWT sponsorship was a loan that BWT now want back, can the team survive losing that much cash in one go? Even if they survive this – presumably by being bought out by Stroll or Mazepin, is there really any hope of the team surviving long term or are we looking at a very slow collapse?

        1. @rocketpanda no, the team is not going into liquidation – for now. They’re sending administrators in, hopefully to sort out the mess. As the article states, they will continue operating for the time being and therefore will be racing in Hungary.

          What the future holds for Force India is a guess, but given its previous success I’d be surprised if it weren’t bought by somebody for a very low price.

          1. Exactly, this manoeuvre will force the sale of FI to the highest bidder at a price that the administrator rather than VJM believes is acceptable. Further, while it’s hard to feel sorry for VJ, there maybe some skulduggery going on by interested parties, VJ is trying to raise money by selling his yacht, but buyers keep defaulting after a sale has been agreed.

            1. I hope they can solve this during the summer break. That employees and suppliers are paid. And that a new race-loving and dependable owner is found because clearly, for however much VJ loved his racing he was not the most trustworthy of businessmen.

            2. @hohum @faulty I always had the impression it was a mistake for VJM not to sell the team at its peak last year – at least a mistake from a business point of view. Surely that is when it would have gone for the most money. Unless there was a lot of debt then too, which might explain why he was waiting to sell it for more

    7. Pedro Andrade
      27th July 2018, 22:09

      The level of reporting on this website went up to another level since Dieter came on board, congratulations to the RaceFans team for the great insight!

    8. Pedro Andrade
      27th July 2018, 22:11

      For those of us with very little knowledge on legalese: does this mean that Perez is forcing the closure of the team, or is this actually helping to find new buyers? I suppose it’s the second, but I’m not sure.

      1. David Moreno
        28th July 2018, 9:06

        the second. By doing this, they make sure VJ cant do a quick sale and get the money out

      2. Perez is just asking to get paid. It may cause the collapse of the company, but the team setup and racing licence are worth money so the team will most likely continue regardless.

    9. Alex McFarlane
      27th July 2018, 22:14

      Interesting strategy….

      1. Alex McFarlane
        27th July 2018, 22:16

        Meant to say “interesting tactics”.

        I think we need so sit tight on this one and see what happens. If it helps accelerate a potential buyout of the team to keep them solvent all will be forgiven I’m sure.

    10. Call me a cynic, but Perez is the proverbial cornered cat here, cornered by a superior but younger driver. You’d wonder if these were his actions if he felt comfortable in his seat

      1. Lucho Adriano
        27th July 2018, 23:57

        He beat Hulkenberg for 3 years, he beat Ocon last year. He is winning Ocon this year, and not to mention that he won a podium this year? What you mean cornered Perez by a younger driver? Ocon is going to Renault, Perez to Haas, Force India is going to Strolls. Perez may just be demanding his payment for doing his job, and being done properly so far.

        1. That’s a lot of news stories you’ve just broken in one go

        2. sainz won’t go back to toro rosso, if ricardo leaves he goes to redbull, ric stay and sainz stays, Ocon is going to be needing a drive as Perez is huge contributor to Force india succes era, great car development, multiple podiums, sponsorship. People needs to take of Perez back mclaren failure, in fact Perez alone have wiped the floor with all maclaren in a force india since they oart ways 5yrs ago.

      2. @hahostolze It’s quite a stretch to say Ocon is superior, they’re very evenly matched and Ocon can’t use the experience card any more.

        1. @tflb An 8-3 qualifying head to head in Ocon’s favor doesn’t seem to appear too “equal”. It basically is the Red Bull situation: one young kid who is faster than the older, more mature, reliable teammate, but overall, not too dissimilar in pure pace.

          1. Perez was never a qualifier, see Button/Mclaren.

          2. No poin is awarded on Saturday @mashiat and wasn’t Perez the only one on podium this year other than the usual 6? I think that he has what it needs to be on par with Ocon

        2. @tflb

          Evenly matched? Not anymore. Esteban has looked much more impressive than Perez this year. He’s had a lot more pace and has raced very maturely. If Ocon hadn’t tangled with Kimi on lap 1 of Baku, he’d have inherited that podium place, and everyone would be talking about how Ocon is “smashing” Perez this year.

          1. @todfod But he did crash in Baku didn’t he? And probably cost Perez a win there the year before. There’s been a tiny margin between them in qualifying and Perez has looked much better in the races. Exactly the same as he did against Hulkenberg. I’m not saying Ocon is bad but he is massively overrated.

            1. @tflb Perez was way overrated yes. Not so much anymore though.

            2. @patrickl No no, Ocon the overrated one… Perez has never seemed to be rated massively highly by those commenting here. For example people always predicted he’d be destroyed by Hulkenberg, which he wasn’t, and then that he’d be destroyed by Ocon – which also hasn’t happened.

            3. @tflb Well FI never bothered getting the car adjusted for Hulkenberg, but you have to be kidding me that he isn’t getting completely crushed by Ocon.

              Even in Hockenheim when Ocon had barely any practice time, he was still right behind Perez. Normally he qualifies ahead of Perez and finishes ahead of Perez. With only very few exceptions. It’s no contest whatsoever between those two.

              You are probably only looking at the points. Where Ocon was taken out of two races where he would have outscored Perez and instead got 0 points.

            4. @patrickl don’t know what series you’ve been watching then. What I and most others see is probably the two most evenly matched drivers. When you say Icon was taken out of two races… you mean when he crashed? Perez has also had some bad luck, for example Hockenheim where you conveniently forget he had a really long pit stop. Then he spun and still finished ahead of Ocon…

              No I haven’t looked at the points at all actually, they’re misleading and actually even now I don’t know which one has more.

              And yeah, of course FI deliberately scuppered their chances for four years by never bothering with Hulk’s car. Get real.

            5. @tflb Ah you have been watching something else than F1? That would make sense.

              Or perhaps you feel that when you have 2 drivers and driver A is almost always ahead of driver B in qualifying and also after the race then this is “balanced”.

              I’m one of those weird people who thinks that when one driver performs better than the other driver in almost every race that that has have some significance. But yeah if you think that means nothing then sure.

              Ocon was taken out by Raikkonen in Baku (while ahead of Perez). That wasn’t Ocon’s fault at all. The other time he had a car issue and one race they both dropped out.

            6. @patrickl Just so you know your intentional twisting of what I’m saying shows a remarkable lack of maturity. Unable to have a reasonable debate I see.

              It was Ocon’s fault in Baku and he got a penalty for it.

              If you take only qualifying then Ocon seems marginally better (key being marginally) but in the races Perez is slightly better. As I said, evenly matched. Don’t know why you’re being a rude confrontational so-and-so but really it’s not particularly helpful.

            7. @tflb Lol, talk about maturity. You were the one who started insulting bud. Get off your high horse.

              I was not Ocon’s fault in Baku. He was well in front of Raikkonen so how could it ever be his fault? Seriously stop making up nonsense. Sure Raikkonen didn’t get a penalty, but it was his fault for ramming into Ocon.

              And yes there obviously is no serious debate possible with you at all because you flat out ignore the facts.

              This is also clearly not about qualifying only since Perez has finished ahead of Ocon only in Australia and Hockenheim. And for Hockenheim Perez has the excuse that he had barely any practice at all.

              Get lost.

            8. @patrickl wow you’re not the most civilised of debaters! I don’t think I insulted you at all. You’re the one being a sarcastic smug whatsit. Ocon got a penalty in Baku. He turned into Raikkonnen as if he wasn’t there. Repeat – He got a penalty. I’m afraid you’re the one ignoring the facts. Now, to use your own particularly unelequent words, get of your high horse and get lost.

            9. @tflb Lol, I was thinking exactly that about you. You come in with your smug pedantic oipinion with which we should igonre all facts and just accept that they are equal. Who cares if Ocon is almost always ahead of Perez. Just ignore it.

              Also, Ocon did NOT get a penalty. Stop it!

              Fact Car 31 collided with car 7 in turn 3.
              Offence Alleged causing a collision in breach of Article 2d of Chapter IV Appendix L of the FIA
              International Sporting Code.
              Decision No further action.

              It’s disgusting Ferrari pandering they even pretended it was Ocon’s fault. Ocon was well ahead. The reverse happened to Raikkonen a year before that when Bottas did the same as Raikkonen did. While Bottas was actually level with Raikkonen going into the corner. Ocon was half a car length ahead.

              I’m not on any high horse. I’m just allergic to people spreading bs.

            10. @patrickl Oops yes I got that one wrong – it was Sirotkin who got the three place penalty I was thinking of, well I knew somebody had got a penalty for a first lap clash!

              That doesn’t change my general opinion however. I’d be interested to see a poll on what people think; I’d very strongly suspect it would be more on the ‘level’ side than on the ‘Ocon destroying Perez’ side. Because Ocon destroying Perez is ‘bs’. Careful with your allergy! Anyway we’re not going to agree and mud-slinging is useless on both our parts so this has run it’s course I think.

    11. Todd (@braketurnaccelerate)
      27th July 2018, 22:29

      Yikes. I think Checo may have just cashed out on F1.

      1. Todd (@braketurnaccelerate)
        27th July 2018, 22:30

        Which kind of leads me to think that he may not have any options for 2019 secured and he might as well get paid.

    12. Following further information the article above has been updated.

      1. Keith, was racefans first to report this?

          1. scoop! Congrats, good work

            1. Although id imagine Mr Perez is not so happy its in the open given the line he was selling in his interviews this last couple of days

    13. BWT is huge on that FI car, one of the most prominent and with the pink colour most powerful sponsor presences in F1. If all of that was for a loan, it just shows how utterly desperate the team must have been.

      1. Most likely BWT provided a lump upfront payment to the team, which would then be paid back over a time period through the sponsorship on the car. Since that ‘deal’ obviously hasn’t been completed yet, and with the team being put into administration, BWT (& Mercedes) would have joined the motion so that the courts and administrator consider them major creditors up front.

        1. Exactly, Dale, it is an insurance against just this situation.

        2. Could it be Perez joined the motion to make sure he got paid and that one of Mercedes or BWT were the one that initiated the court proceedings?

    14. Todd (@braketurnaccelerate)
      27th July 2018, 23:17

      @keithcollantine @dieterrencken

      Can we get the 2019 Drivers & Teams page updated to Stroll & Perez confirmed at Stroll Racing? :D

      1. Stroll-Perez Forces F1. A milestone in F1 history.

    15. Hopefully this situation does not mean the end of the team. They have proven to be good during these last years. Formula 1 needs equipment like this. And I’m not talking about their owners or their pilots, but the rest of the staff.

    16. That is such a shame. Force India has sticked out the past years as the living exemple that putting money into proper drivers probably was the best choice. It seems it isn’t sufficient. Surely F1 must have a hard look at how its best midfield teams are struggling to get ends meet.

    17. So now, Perez and Ocon to Williams?

      Stroll buys FI for a more competitive team. And other seat goes to the gp3 kid.

      Teams need Billionaires to operate. There are plenty in the world…

    18. I have no idea how a new(er) F1 team can expect to survive. It seems that about $100 million is the minimum required to run a team for a year, and that’s on the low side. Income from Liberty is zero the first year, in 2017 Haas got about $19 million, Sauber about $49 million and Force India about $72 million. So with a budget of $120 million, per Autosport, Haas has to generate $100± million/year to operate. Haas sponsors itself, so it’s costing Haas $100± million/year just to exist. How long can Gene Haas continue to pump that sort of money into F1? I doubt the return on investment from advertising Haas Tools on the side of the car is anywhere near that figure. Haas will move up the ladder and receive more Liberty money next year, but still, over five years their actual cash outlay is going to approach or exceed $250 million; that’s one quarter of a billion dollars. This is not sustainable, as Force India is proving. I suspect a death spiral is approaching for some teams. Liberty and the FIA really need to get a cost cap in Formula One, as well as a more equitable distribution of prize money, or we will soon be down to eight teams; factory teams and their ‘B’ teams. This is not good for the health of the sport.

    19. They finished 4th last year, more than double the points of 5th (or top of the ‘second division’), and yet they’re taking on title sponsorship in the form of loans and can’t pay it’s drivers or engine suppliers. Is VJM taking money out of the team, or is F1 just stupidly unsustainable?

      1. How do you make a million dollars in Formula 1? Start with 10 million.

        1. Corollary 1: how do you wind up with a million dollars at the end of the season? Start with 20 million.

      2. bernasaurus (@bernasaurus)
        The 2nd point seems to me unlikely, as Bob Fernley, and other managers at the team have been around formula 1 for long enough to know their responsibilities. Most people around F1 have known for a long time that the spending priorities for all but the top 3 teams in simply unsustainable. The FIA seems unable to come up a formula that is cost effective, so the rest of the teams (apart from the top 3 teams) can thrive and grow instead of tittering almost always on the brink of collapse.

    20. For the team that was 4th in the WCC for the previous 2 years to be in this state, this suggests that the inequity in the sharing of proceeds from F1 is way overdue.

      Either that or there’s been some serious mismanagement, and it’s kinda hard to believe that as their on track management has stood out as one of the best for years.

      I’m hoping (really really hoping) that Liberty will accept this as their first major challenge and will do everything they can to financially support them now that official administrators have been supported. I can understand them refusing to loan them further finds a week or so ago because there was a mess and VJM was still “in charge”. Now it’s being “administered” will they change their attitude?

      If FI is allowed to crash and burn, how many others are heading the same way?

    21. I wonder if there is any difference in tax context to a simple acquisition to a enforcement of a loan guarantwe.
      I mean the initial money was probably taxed or not as revenue from a loan.
      The takeover would probably not be considered voluntarily buying an asset, plus the non perfoming loan might be deductable somehow.
      Sometimes drama is fabricated as legalese is not that funny.

    22. I miss the days of a full grid. And now it seems the grid will be even sparser….

    23. Most of the race teams i have been on have been near bankruptcy. They always spent a little more then they had to go a little faster. Welcome to racing.

      1. That’s a useful reminder /bit of context; Raceteams do tend to spend at least as much as they have.

    24. Sack Perez.

      That’ll save them a chunk of change.

      1. They need to pay him first, and it seems they are broke.

    25. W (@vishnusxdx)
      28th July 2018, 8:45

      And that’s the end of Perez’ career then.

      Who will want this gay in next year’s team?

      – Ignores team orders, has rows with teammate during race.

      – Is not the promising younster anymore, nor is he an extraordinary driver (so no mid or high budget team will want him)

      – Makes his team go into administration (so no low budget team will want him)

      1. W (@vishnusxdx)
        28th July 2018, 8:50

        Oh! I mean guy ofcourse!! Sorry…

      2. CharlieHustle
        28th July 2018, 15:29

        Wow, what an idiot. Perez has literally solely put Force India on the podium in the past 4 years. Huge contributor to the success of where the team is now. Perez brings in almost 20 million in sponsorship money to the seat every year. No low budget team would want him? Ummm, pay me 3 mil per year and I’ll bring you 20 million in sponsorship money. Every team would love that.

    26. So if FI collapses this year and nobody buys them, would we see 3rd cars from the top teams?

    27. From reading elsewhere it seems that quite a lot of people at FI are supporting Perez as they realise that this is the way to get Mallya out and save the team…

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