Analysis: 'Doomed' Arrows Hoping for a Miracle

The Arrows Formula One team were fighting for survival after the London High Court was told on Thursday that they were doomed, barring a miracle.

The team failed to present their cars at the usual mandatory scrutineering time ahead of Sunday's British Grand Prix and the chances of their competing in the tenth round of the Championship at Silverstone look bleak. The two cars in their orange livery did arrive at the circuit shortly after 1730GMT, two and a half hours after the normal deadline.

The governing International Automobile Federation (FIA) had thrown the team a lifeline by extending the deadline to 0900 GMT on Friday. However, another obstacle was presented by engine suppliers Cosworth.

Jaguar team boss Niki Lauda, who also oversees Ford-owned Cosworth, said the Tom Walkinshaw-run team were two months behind with payments for their engines. He made clear that there was no chance of Arrows racing unless they paid the $4.7 million owed to Cosworth.

"We still wait for money," Lauda said. "Tom always came up with the money late so far but it is now two months' payment and I can legally not wait any further. He has not got the engines. He has engines to scrutineer but not to practice."

High Court judge Mr Justice Lightman earlier declared that Arrows were in a "dire financial position" and in danger of collapse.

"If Arrows goes into liquidation, administration or receivership, as appears practically inevitable, creditors may have to seek relief against the directors in proceedings for wrongful or fraudulent trading," he warned.

In Danger

Arrows' lawyer Robin Potts, asked if the company was 'finished', agreed that it was - 'short of a miracle. "At the present time the prognosis is that the company is doomed."

If the team miss a race due to insolvency then the right to compete in the Formula One World Championship will be in danger. Lauda said he hoped Walkinshaw, who has acquired a reputation in the sport as a fighter and survivor against the odds, would come up with the money and not become Formula One's latest financial casualty.

The Prost team went bust in January, leaving 11 teams on the grid instead of the full complement, and Minardi recently expressed fears about their future.

"I have had so many promises to get the money and it doesn't happen," said Lauda. "So what am I to do? I delivered 100 percent so I want the money. We have been negotiating over the money for weeks. We missed two dates. The first was the middle of the month, the last one was the 28th of the month. Now we sit here and wait.

"Sure I feel bad about it but on the other hand you cannot ask a supplier who invested money to build engines and to do this for free. If there is a contract you have to stick to the contract. I have done everything I could do in my power to extend as much as I could his payment schedule.

"I hope he gets the money. I want my engines to run and I want my business case I put together with him to work. I know he has sponsorship coming. He told me the whole story of what he wants to do with his team but I think there seem to be some real big legal problems there."

Application Lost

Thursday's High Court hearing saw Arrows lose an application to lift legal undertakings made to a number of creditors in the Deutsche Bank group of companies. Arrows had hoped to sell its rights to Formula One revenues, under the Concorde Agreement between teams and the sport's rulers, to Red Bull sports drink boss and team sponsor Dieter Mateschitz.

The judge ruled that claimants in the case against Arrows, and in particular Morgan Grenfell Equity Partners, had made a "substantial investment in the team which now totals some $60 million".

He added that "if the management of Arrows is placed in competent and honest hands...something of real value may be salvaged for Morgan Grenfell and other creditors."

Arrows have not won a race in 380 attempts and, with Germany's Heinz-Harald Frentzen and Brazilian Enrique Bernoldi as drivers this season, have scored just two points so far in nine races this year.