Champ Car files for bankruptcy
|By Biranit Goren||Saturday, March 8th 2008, 14:55 GMT|
Champ Car World Series sold its assets to the Indy Racing League for six million US dollars - and has more than $10 million in debts - it was revealed this week, when the company filed for bankruptcy in the United States.
CCWS was founded four years ago, on the back of CART (Championship Auto Racing Teams) - which then filed for bankruptcy itself. The owners of CCWS are team owners Kevin Kalkhoven, Gerald Forsythe, Paul Gentilozzi and Dan Pettit.
In papers filed under Chapter 11 in the US Bankruptcy Court on Wednesday, the company reveals it has around $10 million in debts, as well as almost $2 million to engine company Cosworth - which is separately also owned by Kalkhoven.
Moreover, the court filing reveals the CCWS board approved the decision to file for bankruptcy on February 14th - a week before Kalkhoven and Forsythe issued a Memorandum of Understanding, which directs Champ Car to assign all its contracts, intellectual property and assets to the IRL.
Kalkhoven and Forsythe, according to the memorandum, are also set to receive two million USD from the IRL if they show commitment and support for the newly unified series.
Filing for bankruptcy under Chapter 11 means the court can give a company protection from creditors for a period of time, in order to allow that company to reorganise itself.
In the reasons for filing Chapter 11 papers, Gene Cottingham, vice president and chief financial officer for CCWS, stated in his affidavit the board has "determined that it is no longer economically feasible to sustain an open-wheel series and that [CCWS] did not have the funds to operate the series in 2008."
Cottingham further added: "it is in the best interests of the sport of open-wheel racing in general to sell certain assets to the IRL and to unify the sport of Indy-style open-wheel racing under the IRL, all before the start of the 2008 season."
Champ Car will stage its last race at Long Beach as a shared promotion between CCWS, IRL, Kalkhoven and Forsythe. The IRL will have responsibility for the production and televising costs of the event.
"The cooperative effort to stage the Champ Car finale will preserve the goodwill associated with the Long Beach race, and help to ensure that IRL can add Long Beach to its schedule beginning in 2009," stated Cottingham.