The COVID-19 pandemic has hit F1 teams hard. The likes of Williams were already in a difficult financial situation before the pandemic. Now, they have sunk into further misery and plan to sell their team. Even McLaren, who although aren’t in as bad a situation Williams are in, have also take a big financial hit. Last month they had to lay off 1200 employees in an attempt to cut costs. A few days ago, McLaren announced that they were considering to sell a 20% to 30% stake to raise funds. Now Mclaren is seeking legal action against some of their creditors. The same creditors injected $328 million in the team in March. However, they claim that they aren’t happy that McLaren is looking towards other sources of finance.

McLaren approaches the High Court seeking loans secured by its factory and historic car collection

According to BBC.com, “The company blames the coronavirus for an ‘impending liquidity shortfall.’ Which it says requires new funds to be injected no later than 17 July.” McLaren says that the investment of $328 million by the shareholders that was injected earlier has already been spent as a result of the pandemic hitting them hard.

The documents presented in the court said, “(The pandemic) created a severe strain on the group’s cash flow. The scale and impact of the pandemic quickly became apparent to the senior management of the group.”

Additionally, the document states, “The start of the F1 season has been delayed. Car dealerships have temporarily closed. Supplies have been interrupted. Manufacturing has been suspended or impeded. Customer orders have declined. Sponsorship revenues have fallen and additional costs have arisen from health and safety measures.”

Thus McLaren are looking to get a loan by keeping the McLaren Technology Centre and their car collection as security. However, in a bond that dates back to 2017 these same items were already kept as security, claim investors. BBC.com mentions Mclaren applied for a loan of $169 million from the government. But the government turned them down. Nevertheless, This is the route that trustees of the bondholders suggest as an alternative means of investment that is worth revisiting.

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