LONDON, United Kingdom, June 23 – McLaren’s future in Formula 1 has been called into question, with the team’s finances in such a dire situation they are reportedly facing insolvency by ’17 July 2020′.
Earlier this week it was reported that McLaren is taking the owners of its bonds to court, seeking a High Court declaration that would permit the Group to use its Woking headquarters and historic car collection as collateral for a new loan.
However, it seems they are running out of time.
Days after it emerged that the Group could sell a stake in its Formula 1 team to help cover costs, news of McLaren’s financial troubles again made headlines as the Group sought legal help from the British courts.
McLaren needs to find additional funds and the Group needs its premises and historic cars to do that.
Forbes says the situation is dire.
The publication reports that ‘McLaren says it will become insolvent if the Note holders don’t allow it to release the assets from the security and sell them or secure a new loan on them.
‘It adds that the judge will need to issue a declaration in favor of McLaren in just 17 days so that it can get the deal over the finish line.
‘The filings reveal that “the Group needs to obtain declaratory relief in advance of 17 July 2020. Due to the period of time required to sign the contractual documentation and arrange for the relevant funds to be paid, declaratory relief would in fact need to be granted at least five business days before the funds are required. In other words, declaratory relief is required by no later than 10 July 2020.”‘
The Note holders, though, have put another option on the table as, according to their lawyer, the court case will “not be concluded before the Group runs out of cash.”
The lawyer added that the “the one remaining realistic financing option open to the Group, namely the transaction with the Note holders will collapse and the Group will then have no realistic prospect of avoiding an insolvent liquidation.”
McLaren is facing massive financial loses as the Group has sold less than a third of its McLaren road cars in the first quarter of this year compared to last year. That meant revenue fell from $217.7 million to $136.2 million.
And that was before the company was forced to shut down for the pandemic.