SEPTEMBER 9, 2002
D-Day for Arrows
The bid by a mysterious American multi-millionaire Carl Smith to buy the Arrows team must be completed by today or else the Arrows team will be going out of business - at least in its current form. Arrows is facing a compulsory winding-up order in the English courts on Tuesday. If this happens an official receiver will be appointed to look into the company's affairs. He will then decide whether or not the company can be saved or whether it should be liquidated. The receiver will either then try to run the company and clear the debts - by means of a period of administration - or he will call in a liquidator who will try to realise the assets of the company and pay off as many of the liabilities as is possible.
What happens next therefore is a question open to interpretation. Morgan Grenfell Private Equity is (at least on paper) the biggest creditor and will gain nothing if the team is liquidated. At the same time the team loses all its value if it does at attend the Italian GP as the Concorde Agreement states that any team which misses a race while in a state of insolvency (which presumably includes administration) will automatically lose all its rights and benefits as an F1 team. The only way in which the team can be revived therefore is if there is a very quick sale of rights and cars to a new owner so that a team of some sort turns up at Monza.
Because of the adventures of Arrows in recent months the FIA is unlikely to accept a half-hearted attempt to run a team in Italy and will need to be convinced that any new owner is serious about the business.
The FIA demanded a written explanation from the team after its departure from the Belgian GP. That was received late on Tuesday after which the federation announced that it was studying the case. This left the way open for the FIA to see what happens with the winding-up order. FIA President Max Mosley spend the latter part of last week in Mexico City attending the FIA's American Congress and it is unlikely that he will have the chance to look at the Arrows issue until today at the earliest. The timing has been very clever as it means that the FIA has been seen to have acted without actually having done anything. In this way it will not be blamed for having pushed Arrows out of business while at the same time it has been seen to be taking action, something which was needed to avoid creating precedents with the force majeure regulations.
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