MARCH 10, 2008
Champ Car files for bankruptcy
It has emerged that the Champ Car World Series has officially filed for Chapter 11 bankruptcy, and has sought protection from its creditors. The filing, submitted in the US Bankruptcy Court in Indianapolis indicates that the Indy Racing League has paid Champ Car $10m for its intellectual property rights, a mobile medical facility, in addition to a non-compete agreement and a consulting deal for Champ Car co-owners Gerald Forsythe and Kevin Kalkhoven. The legal documentation suggest that Champ Car has assets of somewhere between $10m and $50m. The creditor with the largest claim is Cosworth, owned by Kalkhoven and Forsythe, which is owed $1.83m. PKV Racing, owned by Kalkhoven, is owed $645,883 and Forsythe Championship Racing is owed $327,961.
The running of the company will remain with the current staff although under Chapter 11 rules all decisions will have to be cleared by a court-appointed administrator. This arrangement will only continue until after the forthcoming Long Beach Grand Prix, the final race in the history of the series. After that the teams will either close down or switch to the Indy Racing League.
The creditors are due to meet on the day after the event and all assets will then be sold off and whatever debts can be paid will be paid.
The company did not file for Chapter 7 bankruptcy beecause it needed to keep operations going until after Long Beach. Chapter 7 would have meant liquidation of the assets. Chapter 11 means that, in theory at least, someone could buy the assets, restructure the company and continue to run it in the future.
It remains to be seen if there is a buyer, but there is little doubt that the bankruptcy presents an opportunity for someone to buy the equipment and set up a series. Competing against the IRL in the United States makes no sense but that does not mean that someone outside the US could not buy the equipment and create a successful series as there are many race tracks around the would which want topline single-seaters but cannot afford a Grand Prix.
Champ Car ahs been using a fleet of Panoz DP01 chassis, which were only introduced at the start of last year. These were fitted with the Cosworth XFE engine, designed to run at 17,000 rpm, but is limited for Champ Car to 12,000 rpm.