Formula 1 racing is serious business. Dollar amounts that rival a small country’s GDP numbers are spent in testing, training and racing, and similarly large numbers come in due to advertising, merchandising, race purses, and so on and so forth. While Formula 1 hasn’t been big in the United States for quite some time, it is such a big deal everywhere else in the world that any and all points of a team, manufacturer, driver, and car are studied under a microscope, because when the team does well, everybody wins, and when they don’t, things go south fast. Currently, the Caterham F1 team (which is separate from Caterham Cars, the current manufacturer of the Lotus Seven-based track car series) is in administration with the Smith & Williamson group and is up for sale, with the team indebted to the tune of over £20 million. F1 mogul Bernie Ecclestone has given the team a “special dispensation” in order to miss the USA Grand Prix and the Brazillian Grand PrixIn the middle of this tornado of bad news is a bitter fight over who is responsible for the debt, former owner Tony Fernandes or the combined Swiss and Middle East group who bought the assets from him, which operate under the Engavest SA moniker.
The story starts out in 2010, when the team, then known as Lotus Racing, came out onto the F1 scene strong. For two seasons things looked good, but by 2013 things had started to get bad fast, bad enough that by early 2014 Fernandes was demanding improvement in the team. Unfortunately, 2014 has not been the year for the team: the “CT05” car was debuted, which was not only considered ugly, but was easily a full second off of the pace of the rest of the cars running. Fernandes put the team up for sale at the beginning of summer and by the beginning of July, Engavest had purchased the team in ready-to-race form. The next move was the firing of forty to fifty employees immediately, which is still being contested in courts as wrongful termination, even though the official stance from the team was a “layoff”. Then, while the team was in Japan at Suzuka Circuit in early October, word began to spread that team assets in the U.K. had been seized for auction to pay for debts. Caterham F1 pushed out a hasty press statement:
“There have been unfounded and unsubstantiated rumours concerning actions against 1MRT, the entrant and owner of CaterhamF1. An action was threatened yesterday against a supplier company to 1MRT. This company is not owned by 1MRT and it has no influence over the entry of Caterham F1 or the entrant. Also contrary to uncontrolled rumours, all operations are currently in place at Leafield and the race team is doing its preparation in Japan.”
Except that parts had been seized, including cars, parts, a simulator, tools, tires and other equipment, by a group referred to as The Sherriff’s Office, otherwise known as SCHE, Ltd., a group of high-court enforcement officials. Everything seized was supposed to go to auction, but was placed on hold on October 3rd while awaiting a court judgement. In the meantime, blame was being traded between Engavest and Fernandes over who was officially responsible for the debt that had been piling up everywhere, with both sides claiming that the other did not comply with the terms of the agreement that was created during the sale of the team. Finally, on October 24th, Caterham Sports Ltd. went into administration, with 1MRT handing over control to administrator Finbarr O’Connell. The same day the Leafield offices of Caterham were locked and employees were notified to stay away until further notice. The lockout affects about 200 workers, who are now left to wonder about whether or not Caterham F1 will survive. Meanwhile, Smith & Williamson are working to find a buyer for the team, and Ecclestone has been quoted that he hopes to see the Caterham team back in action in time for the Abu Dhabi Grand Prix. Time will tell if that miracle can be pulled off.