What happens next in Force India F1 team's fight for survival?

The process of finding a buyer for Force India is only the first challenge in a crucial few weeks for the Formula 1 team

What happens next in Force India F1 team's fight for survival?

Force India went into administration at the end of July with the administrators, from FRP Advisory LLP, now working to find a buyer.

Autosport understands that process should accelerate swiftly with a target deadline for interested parties to submit a bid passing this afternoon (Monday).

What is happening now?

The process of finding a buyer is not expected to be a protracted period given the administrator is incurring the running costs at present and multiple parties are believed to be interested.

Billionaire racing fathers Lawrence Stroll and Dmitry Mazepin and a brace of US consortiums have been linked to the team, with a British firm also claiming to be in the picture.

If a bid has been lodged, the administrator will need to assess its legitimacy and its value.

A new buyer will need to convince the administrators that it is a credible option, and how it intends to finance both the deal and the team in the future.

Force India also has millions in outstanding debt, mostly to minority creditors like Mercedes (owed more than £9million), and this will need to be factored into any deal.

Mercedes may need a commitment to its full debt being paid off to transfer its engine contract to the new company, or it could consider the survival of the team, and what it offers long-term, sufficient or partial compensation.

The cash value of any bid will be a key consideration. Offers to take on parts of Force India's debt are not insignificant, but there are multiple creditors who must be treated fairly.

That means a higher cash offer, which can be split around multiple creditors, would likely be prioritised over a smaller cash offer that is complemented by a commitment to one specific creditor.

What happens next?

With a loose deadline of this afternoon applied to bids, the situation should progress quite quickly: either a credible bid will be lodged and the administrator will work on that, or it could pull the plug if it deems there is no sale in sight.

The administrator will likely be using the company's cash to cover costs at present so it will not want the process to linger.

If interested in exploring a bid, the administrator will keep the team going at a minimum possible cost while the finer details are established.

Force India is owed a considerable amount (up to $72m) from F1 for its results over the past two seasons.

However, a team emerging from administration will be owned by a new entity and it can only obtain the commercial rights accrued by the original team if all other entrants agree.

It emerged last week that McLaren, Renault and Williams had presented a stumbling block to this in a bid to make a point to F1 bosses about what they perceive to be the increasing political power of Mercedes and Ferrari.

So, if the administrator proceeds with a bid, securing consent for Force India to keep its eligibility for prize money, as well as approval from Mercedes to transfer the engine contract to the new company, and drawing up a sale contract will be the next courses of action.

What will the impact be?

If Force India quickly emerges in business, it will be in a position to challenge for a top-five championship finish over the rest of 2018.

However, a protracted negotiation carries two major short-term risks even if the team continues.

Force India has built a reputation of doing a lot with a little, but chief operating officer Otmar Szafnauer and technical director Andrew Green need to ensure that effective, efficient team does not get split apart during this period of uncertainty.

Linked to that is the design team has had updates ready for production for some time, but because of its financial squeeze it has been unable to introduce them to its car in recent weeks.

This has been a recurring theme for Force India all season and it has escalated to a point where several tenths of performance are there on the design table but cannot be put into reality.

The quicker the process is resolved, the quicker upgrades can be actioned: no development work will be carried out while it remains in administration given the need to keep running costs at a minimum.

This will play a vital role in Force India's season: it trails fifth-placed Haas by just seven points, while Renault is 23 points ahead in fourth, but McLaren is only six points behind.

Force India will also be able to turn its attentions to firming up its 2019 driver line-up.

Mercedes junior Esteban Ocon was expected to leave Force India for Renault, but Daniel Ricciardo's surprise move has torpedoed that.

This means Ocon could remain at Force India, but Lance Stroll has been linked with a move to the team - linked to his father's possible investment - and Sergio Perez is also in the frame.

Further down the line, development driver Nikita Mazepin may emerge as an option for a race driver, but he is not a contender for a 2019 seat as he will not have the necessary superlicence points.

shares
comments
More details of Lauda's condition after lung transplant released

Previous article

More details of Lauda's condition after lung transplant released

Next article

Mercedes believes it has made breakthrough with key F1 weakness

Mercedes believes it has made breakthrough with key F1 weakness
Load comments

About this article

Series Formula 1
Teams Force India
Author Scott Mitchell
Why the demise of F1's hypocritical spending habit is cause for celebration Plus

Why the demise of F1's hypocritical spending habit is cause for celebration

For too long, F1's richest teams have justified being able to spend as much as they want because that's the way they've always conducted their business. STUART CODLING says that's no reason not to kick a bad habit

The double whammy that is defining Vettel’s F1 fate Plus

The double whammy that is defining Vettel’s F1 fate

It's been a tough start to Sebastian Vettel's Aston Martin F1 career, with a lack of pre-season testing mileage followed by an incident-packed Bahrain GP. But two key underlying factors mean a turnaround is not guaranteed

The diva that stole a march on F1’s wide-bodied opposition Plus

The diva that stole a march on F1’s wide-bodied opposition

In 2017 new F1 technical regulations were supposed to add drama - and peg Mercedes back. STUART CODLING looks at the car which, while troubled, set the stage for the wide-bodied Formula 1 era

Formula 1
Apr 13, 2021
The themes to watch in F1’s Imola return Plus

The themes to watch in F1’s Imola return

Three weeks is a long time in Formula 1, but in the reshaped start to the 2021 season the teams head to Imola to pick things up after the frenetic Bahrain opener. Here's what to look out for and the developments to follow at the Emilia Romagna Grand Prix

Formula 1
Apr 13, 2021
The 'new' F1 drivers who need to improve at Imola Plus

The 'new' F1 drivers who need to improve at Imola

After a pandemic-hit winter of seat-swapping, F1 kicked off its season with several new faces in town, other drivers adapting to new environments, and one making a much-anticipated comeback. BEN ANDERSON looks at who made the most of their opportunity and who needs to try harder…

Formula 1
Apr 12, 2021
The delay that quashed Aston Martin’s last F1 venture Plus

The delay that quashed Aston Martin’s last F1 venture

Aston Martin’s only previous foray into Formula 1 in the late 1950s was a short-lived and unsuccessful affair. But it could have been so different, says NIGEL ROEBUCK

Formula 1
Apr 10, 2021
Verstappen exclusive: Why lack of car-racing titles won't hurt Red Bull's ace Plus

Verstappen exclusive: Why lack of car-racing titles won't hurt Red Bull's ace

Max Verstappen’s star quality in Formula 1 is clear. Now equipped with a Red Bull car that is, right now, the world title favourite and the experience to support his talent, could 2021 be the Dutchman’s year to topple the dominant force of Lewis Hamilton and Mercedes?

Formula 1
Apr 9, 2021
Are we at peak F1 right now? Plus

Are we at peak F1 right now?

For many, many years Formula 1 has strived to do and to be better on all fronts. With close competition, a growing fanbase, a stable political landscape and rules in place to encourage sustainability, 2021 is on course to provide an unexpected peak

Formula 1
Apr 8, 2021