Formula 1 team Force India, which is co-owned by Vijay Mallya, former chairman of Indian beer market leader United Breweries (UB, Kingfisher), went into administration on Saturday after a High Court hearing in London one day before. Acording to court documents cited in the press 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".
The legal action was triggered by many of the 400 employees who urged Mexican senior driver Sergio Pérez, who is reportedly owed more than $4 million by the Silverstone-based team and Mercedes that is owed more than $15 million to take legal actions. One of the main sponsors, Austrian water treatment company BWT, also backed the deision.
Force India Formula One Team was formed in October 2007 when a consortium led by Vijay Mallya and Dutch businessman Michiel Mol bought the Spyker F1 team for €90 million. Currently Mallya and Indian businessman Subrata Roy, chairman of Indian conglomerate Sahara India Pariwar hold 42.5% each and Dutch Mol family, headed by businessman Michiel Mol holds the remaining 15%.
Mallya, who fled India two years ago and has been living on bail in the UK since August last year (inside.beer, 30.6.2018) said “there is no other way I can describe what is happening other than a witch hunt. I just have to ride out the storm.”
The billionaire, who was nicknamed „the king of good times“ because of his ostentatious lifestyle announced at the end of May to step down as a director of the formula 1 team, to be succeeded by his son Siddharth Mallya, a 31-year old aspiring actor and former marketing manager of Guinness. (inside.beer, 1.6.2018)
In March it was reported that British energy drinks group Rich Energy was heading a consortium to buy Mallya’s Force India F1 team at a said price of £200m ($277m). Founder and chief executive of Rich Energy William Storey said that “F1 is the perfect platform for the brand, motorsport is all about a fast, glamorous lifestyle. It works for Red Bull.” (inside.beer, 8.3.2018)
However, in ordert o sell the team and change its name it needs the consent of all nine Formula 1 teams. Reportedly Williams und McLaren, the two worst teams of last year’s season are opposing such a move and want to share the 60 million stake amongst the remaining teams. In effect Force India would not longer participate from the multi-million distributions. This would significantly decrease the sales price and therefore a possible recovery of the investment of Vijay Mallya, Subrata Roy and Michiel Mol.
On Sunday, in the last race before the summer break in Hungary, the Force India team finished at a disappointing thirteenth and fourteenth position.“It hasn’t been an ideal day for us, but we knew it was going to be a tough Sunday all along,” Sergio Pérez commented the situation.