NOVEMBER 19, 2002
More bad news for Arrows
It all seemed too good to be true and it now appears that the rescue of the Arrows F1 team is going to be more difficult than some had imagined. The case between Arrows and former partner Morgan Grenfell Private Equity has not been settled - as team members had previously implied and the case will now go up before Justice Gavin Lightman at the High Court in London on December 9. The case will be to decide whether or not Morgan Grenfell has any claim to recover money invested in the team. The case will decide the level of the team's debt, which will either be in the region of $30m or will be hiked to $100m. The case has been delayed for many months because of legal wrangling but at the start of July Justice Lightman was highly critical of Arrows and its boss Tom Walkinshaw in a 17-page report after one particular hearing related to the case.
Lightman said that the behaviour of some of the Arrows management "can only be described as underhand and improper, indeed downright dishonest" and said that he felt that the team "is prepared to say or do anything which it thinks best suits its interests".
At the time Justice Lightman said that he felt that if the team was "placed in competent and honest hands" something could be saved. He added that "the management of Arrows are responsible for the prolonged insolvent trading and 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 and fraudulent trading".
Tom Walkinshaw later said that the company was not insolvent and that there had not been any wrongdoing but the team failed to appear for the last races of the season and what value was left in the team has been steadily eroded away with the loss of engineers, sponsors and (although it is arguable) the rights and benefits of the team under the Concorde Agreement.
Arrows lawyers now say that they will ask for the administration petition - due to be heard on December 2 - to be delayed until after the Morgan Grenfell case is heard. By then the FIA will have issued its entry list for next season and it will be clear whether or not Arrows's application has been accepted or not.
This will also mean that the winding-up petition from Heinz-Harald Frentzen and others will also be delayed. If Morgan Grenfell wins the case it is anticipated that it will also move to wind the team up but that cannot be done until the first winding-up petition has been heard.
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