Force India’s sale to a consortium headed by Lawrence Stroll is to be challenged in the High Court in London by failed rival bidder Uralkali.
Dmitry Mazepin, father of Force India development driver and GP3 racer Nikita Mazepin, is a non-executive director at Uralkali, whose bid was spurned by administrators FRP Advisory in favour of the terms offered by Williams driver Lance Stroll’s father Lawrence.Uralkali claims Stroll’s bid was “significantly inferior to Uralkali’s” and argues FRP should have selected its bid as the winner during last month’s administration proceedings.
“Despite Uralkali’s generous offer for the business and assets, which we believe was the best bid on the table, the administrators chose to enter into an exclusivity arrangement with another bidder and subsequently refused to reengage with Uralkali,” the company said in a statement.
Uralkali accuses FRP of failing to recognise their bid was higher, “misrepresentations and lack of transparency” in the bidding process and “failing to achieve the maximisation of sale proceeds for the benefit of creditors, shareholders and other stakeholders” through its sale to Stroll’s consortium.
According to Uralkali, FRP subsequently acknowledged Stroll’s winning bid “was significantly lower than Uralkali’s”, which prompted the decision to begin legal proceedings.
RaceFans understands Uralkali’s bid would have resulted in a substantial amount being made available to the sole shareholder of Force India (Orange India Holdings Sarl) following the repayment of creditors and settling of the administrators’ costs.
In a statement issued to RaceFans, FRP said they are awaiting formal confirmation of any proceedings being brought against them and insisted they had executed their role as administrators correctly.
“The Joint Administrators to Force India Formula One Team Limited note that Uralkali issued a press release this morning detailing how a claim has been issued against us in High Court in London. No such claim has been received by us or, as far as we are aware, by the Court. If a claim is issued it will be defended vigorously.
“We have fulfilled our statutory duties as administrators throughout this process and ultimately achieved a very successful outcome for all stakeholders. Any legal action brought against us will be defended vigorously, and we are confident it would be dismissed.”
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nase
27th September 2018, 7:36
So far, so expected.
ColdFly (@)
27th September 2018, 7:47
Good luck.
Administrators are one of the most difficult bunch to sue (even more difficult than the police). Administrators do make mistakes, but in 99.99% within the legal boundaries of their responsibility.
And on top of that, the suers are mostly emotional unsuccessful bidders, or somebody lower in that organisation who has not told his/her boss the whole reason why they missed out.
PS (some free legal advice) – they might be more successful if they ‘sponsor’ Williams/McLaren/Sauber/others in opposing the special FIA treatment ‘Force Racing Lines’ got. That way the re-start could still shatter!
tonyyeb (@tonyyeb)
27th September 2018, 9:06
I think @dieterrencken meant his reply to you @coldfly.
I agree. It is not in the interest of an adminstrator to break any rules in this process. It is their sole business and actions like that don’t do them any favours in the future if found out.
ColdFly (@)
27th September 2018, 9:18
Thanks for lining it out, @tonyyeb.
(did you see what I did there?)
tonyyeb (@tonyyeb)
27th September 2018, 9:19
@coldfly I did.
Basil (@flyingbasil)
27th September 2018, 11:52
@coldfly in reality they should sue FRP and become a title sponsor of Williams and actually show that money they are saying they offered. That picture would be a complete PR disaster for FRP and Stroll.
Dieter Rencken (@dieterrencken)
27th September 2018, 7:50
Racing Point or RacingLines? As proprietor of RacingLines I can assure I have no connection to the team save an ear to the ground!
Gabriel (@rethla)
27th September 2018, 7:57
The plot thickens
ColdFly (@)
27th September 2018, 9:16
;)
sorry @dieterrencken & @keithcollantine for the mix up (if only we had an edit option).
The good news is that ‘Racing Lines’ is more top of mind than ‘Racing Point’ or whatever those Force guys are called today
Joao (@johnmilk)
27th September 2018, 11:20
don’t bring the Force into this, that’s a path you won’t be able to follow
Shimks (@shimks)
28th September 2018, 10:24
@johnmilk, I know what you are getting for Christmas. I felt your presents!
Joao (@johnmilk)
28th September 2018, 10:34
a seat in the Jedi council @shimks?
Pat Ruadh (@fullcoursecaution)
27th September 2018, 12:18
Never believe anything until its been officially denied!
Lauri (@f1lauri)
27th September 2018, 7:55
I think odds are suprisingy high for Force India to have their race gear and cars held in Russia after Russian GP… Business in Russia is not like we’ve used to.
I’d like to ask when did Russian money really help anyone in F1? There’s some money coming in and lots of problems always. Marussia… GENII/Lotus Russian money so that they couldn’t talk/tweet about some subjects etc.
MacLeod (@macleod)
27th September 2018, 8:06
No, that will not happen if they do that then Russia is of limits. He should learn to make a better bid at the start not after the starting bids.
Andrey Baydin (@minilemm)
27th September 2018, 8:26
Oh, off limits.
Nooo, they could never do that then.
But I’d be surprised if they do actually, f1 isnt a business exercise for the money bunch here in Russia, its a PR exercise, and compromising that for money is nonsense, considering how much they burnt to make it happen.
They could if they wanted though as the administrative powers and financial powers are basically the same powers.
Basil (@flyingbasil)
27th September 2018, 11:43
They went to court in LONDON. Get over your bias towards Russia.
Marussia didnt have money, GENII didnt get money from russian sponsors and dropped Petrov. I’d say a LACK of russian money didnt help anyone. However Ferrari is benefiting from russian sponsorship for almost 10 years now without any trouble.
Zim
27th September 2018, 9:31
Is there a legal obligation in the UK to accept the highest bid based on its financial offer alone?
What if Lawrence Stroll’s bid was preferable overall due to something other than money, e.g. company structure?
Ignorant of the field but am interested.
Basil (@flyingbasil)
27th September 2018, 11:47
It was a hostile takeover clearly pre-arranged. Mazepin it seems had some sort of agreement with Malya, hence why he was prepared to pay more and keep the team intact. Stroll bought just the assets, and legally started a new team.
Nitzo (@webtel)
27th September 2018, 13:04
@zim
I am not sure about the laws in UK, but here is my thought: if a certain sale is done through bidding or auctioning, then the outcome of the sale should ensure that the stakeholders (mainly sellers) get the maximum benefits.
Otherwise, the very procedure of making such a sale is pointless. Now RPFI will have to defend/argue saying that the benefits of big from Stroll and Co outweigh that of Urakali’s.
@flyingbasil
I agree. But if it was just a sale of assets by A to B, then there was no need for a bid in the first place.
bernasaurus (@bernasaurus)
27th September 2018, 14:40
I think the administrators have relative free rein in who they choose, so long as they can argue it was the best option for any creditors (outstanding tax first), then staff, then as a going concern. Both planned to pay all creditors in full quickly (as far as I can see), and I doubt Mazepin would have a case based on he had greater plans for the team in the long term (I don’t think it’s the administrators job to look at the competitiveness of the team, and what will lead it ultimately to success, merely that it can pay it’s bills).
Is it linked to what Vijay thinks he’s owed and presumably missed out on as Racing Point is a now a new team? Thus loans etc that Mazepin was planning to pay, Stroll never had to. Mazepin could argue his was the strongest bid, because he offered to play all the debts, and continue with the same entry and thus fulfil the keep Force India a going concern criteria.
anon
27th September 2018, 15:38
@bernasaurus, it seems that, under UK law, it would be necessary for Uralkali to prove that there was negligence on the part of the administrators when selling the company.
Under UK law, an administrator is expected to exercise “reasonable care and judgement” when arranging for the sale of the company, which means that he is expected to obtain “the best prices that circumstances as he reasonably perceives them to be permit”.
Now, Uralkali might be able to argue that they would have done a better job in keeping the company as a going concern and offered better terms to the creditors. If so, and if Uralkali can prove that the administrator was uncooperative with them when they tried to purchase the team, then they potentially do have an argument that the administrator was not exercising “reasonable care and judgement”.
Nitzo (@webtel)
28th September 2018, 6:38
@bernasaurus
Mazepin would have a case if Uralkali can prove that their bid is at least as beneficial as Stroll’s bid (if not more). I think its safe to assume that the administrators have an inherent obligation to ensure that the firm continues to function as a going concern.
@anon explains this well in his last para.
Euro Brun (@eurobrun)
27th September 2018, 9:37
I hope they get shot down in flames and loose a tonne of cash in the process.
Some people need to learn the hard way that the best bid isn’t always the highest bid!
Basil (@flyingbasil)
27th September 2018, 11:44
And how is that possible? Highest bid means a higher budget and no Stroll in a car, what can be better?
Andrew in Atlanta
27th September 2018, 13:59
Higher bid does NOT necessarily mean higher budget and other reporting seems to feel the bid was rejected as they did not want to consider the team in operation and would be destroying the current team likely resulting in the team not being on the grid for the remainder of the season. The bid from Stroll and Co accepted the terms of the FIA/FOM to keep the team in operation which was considered to be a better bid for the company as a whole. Just because a bidder would spend more cash, without knowing the legal ramifications of such a buyout, does not make it the best bid.
DB-C90 (@dbradock)
27th September 2018, 10:14
Am I the only one that thinks the speed at which the Stroll bid was accepted/rammed through was just a little suspect?
I’ve known quite a few businesses to go into administration and in nearly every case, that has not been resolved for months, not a couple of weeks.
It just seems that the bidders (both Ukrali and Stroll) were very quick off the mark, almost like there had been plenty of information handed out before administration proceedings even commenced.
No doubt FRP will come out of it squeaky clean and everyone’s lawyers will make a bundle playing “who wants to be a billionaire” but the whole process just doesn’t seem to have been all that businesslike.
Robbie (@robbie)
27th September 2018, 13:55
@dbradock I wonder, and wouldn’t be surprised, if there was big motivation within F1 and Liberty to do a deal that would ensure the team didn’t miss a race, since the grid is already small and their absence would be very noticeable and very embarrassing, as opposed to something that would have taken months to resolve. I would think that if Mazepin supposedly already had something set up with Mallya, then yeah I’m guessing there was already a buzz around F1 about the possibility of this happening. After all, Mallya first got charged in 2012 with financial issues. Many must have seen the handwriting on the wall. As to Mazepin’s claims, I wonder if his deal with Mallya became invalid when control over the situation was taken away from Mallya through his continue non-payment to those he owed money.
Todfod (@todfod)
27th September 2018, 10:57
Am I the only guy who finds it hilarious that 2 kids have forced their daddies to buy them a Formula 1 team just so that they can drive an F1 car? It feels like their respective daddies are fighting over the last toy in the toy store.
Kind of reminds me of the plot of that Arnie movie – ‘Jingle all the way’
Joao (@johnmilk)
27th September 2018, 11:21
My dad is more millionaire than yours
No, my dad is
No, my dad is a billionaire
My dad is billionairer
No, me
No, me
No, you
No, you
Gotcha
Basil (@flyingbasil)
27th September 2018, 11:45
The only problem is that Mazepin wouldnt be driving next year, but Stroll is going to.
TFLB (@tflb)
27th September 2018, 13:30
@todfod Mazepin doesn’t have enough points for a superlicense and is unlikely to any time soon so he wouldn’t be driving anyway.
‘Maybe get your facts right’
Todfod (@todfod)
28th September 2018, 16:26
@tflb
Maybe don’t get too excited. His dad can buy it before her enters in 2020 or 2021
TFLB (@tflb)
28th September 2018, 19:03
@todfod Not excited about anything. Reality is Mazepin has I believe 1 super license point? So if he maintains his 2nd place in GP3 he’ll get 20, and will then need to finish 5th or higher in F2 next year to have enough. If he drops down to 3rd he’ll need to finish 4th or higher. And then after that, he’ll start losing his points from GP3. I think we can finally agree on something (pigs flying etc) – that based on what’s been seen of his talent so far, that is going to be a tall order.
Robbie (@robbie)
27th September 2018, 15:53
@todfod Yes you are the only guy that thinks Lance forced his Dad to buy an F1 team.
Todfod (@todfod)
28th September 2018, 16:29
@robbie
Of course. Papa Stroll is buying this team because it is such a great investment opportunity. The economic viability of a midfield F1 is phenomenal. It has absolutely nothing to do with the fact that his son is an F1 driver and wants to move to a better race seat.
Robbie (@robbie)
28th September 2018, 17:13
@todfod Lol I do get where your attitude is coming from, but just a couple of things, since it is highly unlikely Lance ‘forced’ his Dad to buy a team. It is not just his Dad, it is a group of investors that likely wouldn’t nearly be so keen to do as Lance wants, and let’s keep in mind Lawrence has been hanging around F1 since the early 90’s, before Lance was even born. So Lawrence might just also be fulfilling a dream of his own.
praxis (@praxis)
27th September 2018, 11:59
Excuse me :D (@square-route)
27th September 2018, 12:14
I hope Ocon’s dad was also a giant billionaire..
Is he?
#NoLanceStrollin2019
Kyorin
27th September 2018, 14:18
It will probably work out well for Ocon in the long run, I expect that he will replace Bottas at Mercedes the year after next.
dutchtreat (@dutchtreat)
27th September 2018, 16:25
When I was 16 in 1966 my Daddy helped me buy a racing team. It was a very used Italkart.
OOliver
27th September 2018, 18:19
So many rules were broken for this deal to take place. It will be absurd if either FOM or the FIA later use these entry rules to disqualify an applicant our another team under administration.