Lloyds hit by $16m loss over collapse of Marussia F1 team

The Marussia driven by injured Jules Bianchi

Taxpayer-owned Lloyds Banking Group stands to lose more than $16m from the collapse of the Marussia Formula One team, according to its administrators.

Documents from FRP Advisory dated December 18 show that the bank's private equity division, Lloyds Development Capital (LDC), is at the top of a list of more than 200 other creditors who are owed a total of $49m. They are on track to lose all their money as, unlike LDC, their debts are unsecured.

The biggest bill is the $26m owed to Ferrari for supplying engines to the Banbury-based team. Ferrari is followed by British engineering firm McLaren, which is due $11m.

LDC is owed $21m which is secured on all of Marussia F1's assets. It gives LDC priority over the other creditors, but according to documents from FRP, the estimated payout will come to $2.0m at most. Geoff Rowley, managing partner at FRP, said "the secured creditors will suffer a significant shortfall." He adds that there is "insufficient property to enable a distribution to be made to unsecured creditors."

The F1 team was set up in 2010 with funding from LDC, which became its majority shareholder. Its performance on track spluttered and it only managed to score two points over the past four years. In April LDC sold its shares to Marussia, the Russian sports car manufacturer which the team is named after. It followed years of reversing financial results.

The red ink began to accelerate in the year to December 31 2013, when Marussia made a net loss of $17m on revenue of $95.4m. It didn't let up this year when its net loss came to $45.5m on revenue of $39m over the eight months to August 31. Marussia went into administration at the end of October and most of its 170 staff were made redundant at the beginning of the next month. Mr. Rowley said "by reason of its outstanding liabilities and cash position, the company was insolvent on both a balance sheet and cash flow basis".

Its main source of funding was investment from Marussia's ultimate owner, Russian businessman Andrei Cheglakov. However, it also received $11m annually from British driver Max Chilton, son of Grahame Chilton, the former chairman of reinsurer Aon Benfield [and at least that much or more from its other ride-buyer, Jules Bianchi before he was severely injured in Japan.]

The documents reveal that "it was apparent to the directors that Andrei Cheglakov was not able to inject sufficient funds to pay all historical creditors".

Marussia missed the last three races of this year's F1 season and last week FRP began selling the team's equipment in an auction at its factory. Mr. Rowley said that he had been advised that "on a close down break-up basis, realizations of assets would be in the region of $2.0m." In addition, there is $1.05m of cash in the bank.

Mr. Rowley added that the chances of Marussia returning to the track next year are slim. The Telegraph