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Caterham Formula One Factory Closed; Team's Fate In The Balance

Caterham F1 employees "found their factory closed on Thursday but a legal administrator overseeing the property held out hope that the struggling team might still survive," according to Alan Baldwin of REUTERS. Finbarr O'Connell, joint administrator for Caterham Sports Ltd., a company that makes and services the cars for entry holder 1Malaysia Racing Team (1MRT), said that "various parties had approached him to express interest either in the assets or keeping Caterham racing as an F1 team and negotiations were ongoing." O'Connell said, "They (the staff) can't get into the factory today. They (1MRT) are using my facilities and haven't paid me" (REUTERS, 10/23). The BBC reported O'Connell said that "he was trying to resolve the situation with 1MRT but until then had locked staff out." O'Connell said that 200 jobs were at risk and up to £20M ($32M) "was owed to external suppliers." One employee at the site said, "We've just been given a letter saying we're not allowed in today -- it seems to be a very confused situation" (BBC, 10/23).

RACE AGAINST TIME: In London, Daniel Johnson wrote F1 CEO Bernie Ecclestone is "stepping in to try and broker a deal between the new owners and founder Tony Fernandes." Caterham staff "now face a race against time to resolve the bitter dispute, with the cars scheduled to be shipped to Austin, Texas for the next race on Saturday." It seems highly unlikely that Caterham will make it to the grid in the U.S., "with Marcus Ericsson and Kamui Kobayashi’s chassis inaccessible." Ecclestone "has stepped in to try and cool tensions and keep the green cars on the grid." It "would be a PR disaster for F1 to lose a team in the middle of the season, putting off new entrants no end." Ecclestone said, “We’re trying to help in any way we can, which we do with anybody that has run into a difficult of difficulty. All I know is what I’ve been told. Not too sure it’s all true either” (TELEGRAPH, 10/23). The BBC reported Ecclestone said he could not say whether the team had a future because "it is a little bit too complicated to be able to say anything with any real knowledge." Ecclestone: "I'd rather not lose the teams" (BBC, 10/23).

LEGAL ACTION: The PA reported Fernandes faces legal action by the "owners" of Caterham as the F1 team stands "on the brink of going out of business." Caterham was "bought from Malaysian entrepreneur Fernandes at the end of June by a consortium of Swiss and Middle Eastern businessmen, since when the organisation has been forced to deal with numerous difficulties." Already facing an unlawful dismissal suit by a group of more than 30 staff axed over the summer, on Monday a supply company to the team -- Caterham Sports Ltd. -- "was placed in administration." Crucially, however, "the consortium claims AirAsia and QPR owner Fernandes, along with two other former owners of the F1 team, failed to act in good faith with regard to the transfer of shares of ownership." In essence, the consortium has been "running Caterham over the last few months without being the legal owners." Given the countless issues, it has now decided "to withdraw all management from the team and effectively told Fernandes he is again in charge" (GUARDIAN, 10/22). SKY SPORTS' James Galloway wrote Fernandes "has hit back at claims made by the operators of the Leafield team," insisting they have "failed to comply with any of the conditions in the agreement." Fernandes said in a statement, "In June 2014, I decided, together with my co-shareholders, to sell my stake in the Caterham F1 team. We agreed in good faith to sell the shares to a Swiss company named 'Engavest' on the basis that Engavest undertook to pay all of the existing and future creditors, including the staff. ... Sadly, Engavest has failed to comply with any of the conditions in the agreement and Caterham Sports Ltd has had to be put into administration by the bank, with large sums owing to numerous creditors. Our agreement with Engavest was very clear: there was no legal obligation to transfer the shares to them unless certain conditions -- which included paying creditors -- were met. Those conditions have not been met" (SKY SPORTS, 10/23).

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