DECEMBER 4, 2006
Meanwhile in court
The case between the Formula One group and Kamos-Finanz over the question of repayment of a loan made to the group to help buy the commercial rights to Formula 1 is still going through the courts - and it is a complicated business.
Back in 2001 the Formula One group was owned by the German company Kirch Media GmbH. It created a subsidiary company called Formel Eins Beteiligungs (FEB), which was the firm that bought the rights to F1. FEB borrowed $140m from Kirch and then took out a loan for $120m from the Zurich branch of Credit Suisse. This added to $60m which had been a downpayment on the FIA deal in 2000 made up the $313m that ended up in the hands of the FIA Foundation.
The problems began when Kirch ran into trouble in 2002 with the result that FEB filed for bankruptcy protection in June that year. Six months after that an obscure foundation in Liechtenstein paid Credit Suisse to settle the outstanding FEB loan. That led to an investigation but the German public prosecution service later ruled that no criminal activities had taken place.
Somewhere along the way Kamos-Finanz paid $5m to acquire the right to claim the full $313m of debt (probably from FEI) and was willing to take the risk that it would have the right to reclaim the full amount.
The question of who owns the right to collect on the debt is still being sorted out in the German courts and so the High Court in Britain has decided to wait until March next year before it decides whether to consider if the British case should go ahead.
The Formula One group, not surprisingly, is arguing that it is best not to make any payments just yet, so as to be sure that the money is going to the right company.
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