Esteban Ocon, Force India, Circuit de Catalunya, 2018

Force India was just “days” from closing before rescue

2018 F1 season

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Force India team principal Otmar Szafnauer said the team came within days of collapsing before going into administration and being bought by new owners.

Szafnauer said described how close the team came to being declared insolvent, which would have forced it to close its doors.

“It was pretty close,” he told media including RaceFans last weekend. “I think some of the creditors had legal actions to go down the insolvency route as opposed to the administration route.

“The significant difference is [with] insolvency you close the doors and you sell the assets and you’re done. Whereas [with] administration the administrator tries to find a solution for the company to keep it going. And we were very close to insolvency rather than administration. It was only a matter of days or weeks.

“So the solution was a good one in the end for the team, the employees, the fans and I think Formula 1 in general.”

A company linked to driver Sergio Perez initiated the administration proceedings. A consortium led by Lawrence Stroll, father of Williams driver Lance Stroll, successfully purchased the team’s assets and will pay the money it owes, Szafnauer said.

“All the debts will be paid 100% by the new consortium that bought the team. We will bring the debts down to zero. That’s just a timing issue of when that happens.”

The new owners also intends to invest in the team’s resources in the “medium term”, said Szafnauer.

“It’s going to be some more people, strategically hired, and it will also be some more technical infrastructure. For example I think we’ve ordered the next stage of our CFD upgrade. That’s a small example, there’ll be some other things.”

“We just have to now continue to do what we do best and that’s with the resources that we have, the human resources and the infrastructure that we have is to do the best with the car on-track,” he added.

“And now with being on a little bit better financial footing we also have to look to see how we can expand that to increase our performance even further. Those are the two things we’ve got to do. One’s immediate and one’s a little bit more mid-term.”

Read the full story on Force India’s rescue deal in Dieter Rencken’s new RacingLines column today on RaceFans.

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2018 F1 season

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20 comments on “Force India was just “days” from closing before rescue”

  1. Those are the two things we’ve got to do. One’s immediate and one’s a little bit more mid-term.

    Let’s hope Stroll’s promotion to a race seat is only the long-term plan :-P

  2. What is not clear is how exactly they got into this situation in first place. They’ve had probably more prize money they had budgeted for by coming 4th in championship twice in a row, they clearly run a tight ship at factory and driver salaries probably not extortionate. So where did the financial black hole come from?

    1. I’ll hazard a guess. 2 of the 3 former team owners have huge claims against their person and assets frozen.
      Either those claims extended to the team, limiting or blocking their ability to pay off debts, or the team owners have been taking money out of the team for their own expenses…

      1. It was reported that the biggest creditor at £159m was the holding company, presumably owned by Mallya as he claims he is owed this.
        I’ll hazard my own guess that when Stroll said that all the creditors would be paid, some might get overlooked….

    2. @ Gabriel What I found surprising was that it took a driver to initiate proceedings. Why weren’t some of the managment involved in trying to save the team and what did the deputy team principal do wrong that the fired him immediately. I was under the impression that he had run the team very successfully in the past. Well I hope that they have a very successful and profitable future ahead of them.
      @Phylyp I hope that they put Lance in as soon as possible so that we can see if his success in the lower formula’s will be repeated in F1 The people on this site with all their hate for the Strolls don’t give credit where it is possibly due. Give the boy a chance. I think that most of the comments about Lance on this site are fueled by simple childish jealousy. I am willing to bet that all of you haters would give your right arm to be in Lances position.

      1. @angie – like many other comments, the issue is not Lance getting a seat per se, it is that it is likely to come at the expense of Ocon, who is already a good driver having delivered FI (in conjunction with Perez) to a 4th place in the WCC last year. Why shake up a winning formula? I’m fine with Stroll Sr. putting in his money into FI, they are one of those teams badly in need of an infusion of funds, I’m not thrilled that it come at the cost of a good driver’s seat. Regarding replicating his successes in the lower formulae, let me just point out that Lance Stroll’s performance last year made Massa look like a #1 driver.

        @gabf1 and @gabf1 – you make good points about how the earlier management could have let things slide to this extent. In Dieter’s discussion some weeks ago with Vijay Mallya, we got the indication that Mallya was holding out for a better selling price for the team than what was being offered at the time, which gave us hope that the team could survive until F1’s more equitable prize money distribution kicked in. For the team’s finances to have imploded this rapidly, somebody must have pulled the plug. Whether that be the owners’ creditors as Bart has suggested, or some other cause, we can only wait and hope that it comes to light.

        1. Ack, that second para was meant to be AT gabf1 and AT angie

        2. @phylyp “Regarding replicating his successes in the lower formulae, let me just point out that Lance Stroll’s performance last year made Massa look like a #1 driver.” He was a rookie last year and he got a podium. As I said. Give him a chance.
          “I’m fine with Stroll Sr. putting in his money into FI, they are one of those teams badly in need of an infusion of funds, I’m not thrilled that it come at the cost of a good driver’s seat.” Ocon was put into Force India by Mercedes who will no doubt put him into Williams next year as Kubica’s contract is only for this year. Then you can compare his performance in the Williams versus Lance. Lawrence Stroll has spent a great deal of money to get Lance where he is now so being able to put his son into a more competitive car is natural and he will likely do that sooner rather than later. What would you do if you were Lawrence?

          1. I think its a flawed way to think of it as Ocon is being sacrificed here.
            Stroll wouldn’t have put the money into FI if it wasn’t for Lance. So Ocon would have been out of a seat anyway.

            Ocon has Mercedes backing. He will be alright, if KMAG survived McLaren, certainly Ocon can survive this.

          2. @angie, if I were Lawrence, I’d have made a decision about putting a consortium together to purchase a F1 team based on whether or not it was a good investment.

            The last thing I’d be considering is whether or not I would force the current drivers out in favour of one of my children.

            I’d also be letting my child know that he/she would need to prove they deserve a seat in my team, the first step of which would be to very clearly demonstrate that they could comprehensively beat their rookie team mate.

            I run a business – all my children know that they can get a job there provided that they prove to me they have the skills (and the desire) to do the work to the standards my customers need. They consider that fair and correct, they don’t expect me to “just give them a job” and get rid of a staff member just because they want to work in my business.

          3. @dbradock So check off your first box. Stroll and his fellow investors have made a good investment. One of the first things (not last) you’d have no choice but to consider would be the maelstrom from within and without F1, and especially within the new investment group, regarding what would inevitably come up, that being that you have a son in F1 at Williams.

            Lawrence and Lance are likely very much on the same page as to what is expected, and having a reasonable car to show that is one big step toward that goal. It’s not a black and white thing with a problematic car that can’t make the tires work. So giving your son the actual tools to show what he has proven in the past he can do, is essential or failure within the company will be inevitable no matter the skill level. Ask Alonso how much the best driver on the grid by some fans account can do in a bottom rung car. For your son, especially vs a non-family employee, you’d be more in tune with the concept of whether or not you have provided the means for success by your son within your company.

            Yup your kids are expected to carry their own weight, hopefully add new ideas to the entity too, and not by displacing someone else. There is no evidence to suggest Lance has insisted one of the FI drivers be ousted to make way for him mid-season. That’s a complex decision that has to be tackled from several angles and certainly does not stem from Lance pulling his Dad’s strings. Let’s say your son was cutting his teeth at another company similar to yours, for the experience, but that company is declining as it turns out, and only harming your son’s reputation. Are you going to just let that happen, or isn’t it time he has a chance and the tools to really show whether or not he belongs, whether or not it is meant to be?

      2. @angie

        What I found surprising was that it took a driver to initiate proceedings. Why weren’t some of the managment involved in trying to save the team

        Perez acted on the urging of at least part of the management at Force India. See here for explanation:

        1. Thank you Kieth. I have been keeping up with the story as it unfolded here it is just that I found it strange that the team would expose a driver in such a way. Perhaps it was by design in order to attract media and public attention?
          Initially I thought that Perez was taking a big risk acting as he did but it looks like it will all turn out OK at least in the short term. We shall see what happens later on.

          1. @angie – I tend to suspect that Perez initiated the proceedings because he was technically a creditor and could do so, and while it may have looked bad it’d look much worse for Mercedes HPP to initiate it (who were owed for supplying the engines and seemingly willing to support administration, but owned by a rival), and other creditors were looking for insolvency rather than administration or simply were owed less than Perez.

            For Perez to go through with it, I would guess that they offered him an airtight 2019 contract regardless of what happened with the other seat (Stroll or Mazepin’s choice), plus obviously his millions of pounds in back pay. He presumably also gets the gratitude of all of his colleagues in the team for helping to secure their jobs into the future!

    3. @gabf1 I’m curious too. Maybe today’s @dieterrencken column will shed some light.

      1. @DB-C90 – Claptrap. Family comes first if you want to keep one.

        1. @Kelvin Agree 100% Why is it that none of these other posters can’t see that. Wish I had a dad like that and likely so do all the other posters here. If not, then they are only deluding themselves.

  3. Racing Point Force India ?

    I wish they just called it “Geddit India”

  4. I just believe some well connected individuals made the conditions conducive for a takeover. ForceIndia had money guaranteed for the following year I don’t see how that equates to insolvency. Fernley probably wasn’t too keen on partaking in the uprising that led to the change of ownership hence he was kicked out.

    1. Had money guaranteed? Yet they weren’t paying Perez?

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