Donington advisors out of pocket after F1 scheme collapse

By LJ Hutchins

CalendarWednesday, January 20th, 2010

 
 

The finance and development experts brought in to help give credibility to Simon Gillett’s Donington F1 dream were among those burned when the plans collapsed, the report into its administration has revealed.

Finance specialists ISG have been left with an unpaid bill of £103,500 while construction expert Jayne McGivern is £60,000 out of pocket.

Listed alongside them as creditors are a host of East Midlands businesses that will be largely unable to recoup the cash they were owed by Donington Ventures Leisure Ltd and a subsidiary company.

International Stadia Group (ISG), a subsidiary of sports marketers IMG, are the stadium specialists that helped source funding and sell premium seating at Wembley Stadium, London’s O2 Arena (formerly the Millennium Dome) and Dublin’s Aviva Stadium.

The company had been bullish in support of DVLL’s plans. Speaking in June, when problems signing off planning documents were finally overcome, ISG chief executive Andrew Hampel said: “It is nonsense to say that the Donington Park figures and debenture scheme does not stack up.

“ISG has vast experience and we are world leaders in the area of stadium and arena marketing. Without doubt, as paying customers, motorsport fans are ready for the same level of quality that fans of other leading sports have become accustomed to, and there is no reason that Donington Park cannot provide that.”

An administrators’ report has revealed that, at the time those words were spoken, the company was embarking on its third finance bid, a bond issue, after two previous attempts to fund the project had collapsed.

Also among DVLL’s creditors is Red Grouse Properties Ltd, the business belonging to Jayne McGivern, the construction expert brought in to oversee the redevelopment project in August having previously worked on both Wembley and the O2 arena. Her company is showed as being owed more than £60,000.

Administrators were called in during November to take control of DVLL, the company set up by Simon Gillett and his partners to bring Formula One to the Leicestershire circuit, and its wholly-owned subsidiary Donington Park Leisure Ltd (DPLL).

Many of the biggest creditors of DVLL are firms offering professional and consultancy services associated with the project. The administrators’ papers also show that DVLL went into administration owing £3,100,000 in rent arrears to circuit owners Wheatcroft & Son.

Leicestershire Constabulary is owed £139,210 while Ruttle Plant Hire is £29,195 out of pocket and estate agent Savills is listed as being owed £40,822. Security consultants UK Security Ltd are due nearly £43,000 and consulting engineers Upton Wells are owed nearly £77,000.

And Motocross promoter and rights-holder Youthstream is a creditor to the tune of £85,000.

Creditors of the subsidiary company DPLL are much more numerous and are generally owed smaller sums of money, largely for utilities or for services related to the day-to-day running of an events venue. One of the largest single creditors is URS Corporation, an international environmental services consultant owed nearly £249,000.

But particularly noteworthy is a £83,000 debt to Leicestershire and Rutland St John Ambulance, as well as more than £78,000 owed to the local tradesman who helped maintain the grounds.

Castle Donington Parish Council is owed £12,690, a local catering company nearly £88,000, and there are outstanding bills from several security companies totalling in the hundreds of thousands. The company also owed thousands of pounds to dozens of individual doctors in fees for providing on-call medical services during events.

A portable toilet company is owed more than £91,000 and breakdown service The AA £70,000. Masters Historic Racing is due more than £3,000 and Jonathan Palmer’s Motorsport Vision Racing has a bill in for slightly in excess of £1,000 while nearby karting circuit Three Sisters is owed more than £38,000.

A headline figure for the extent of the two companies’ debts is difficult to come by, as the administrators’ calculations include a liability owed to the Anglo Irish Bank that is listed separately against both companies, since they are jointly and severally liable for it. There is also no provision for the cost of the administrators’ services.

The estimated deficiency as regards creditors given in the directors’ estimated statement of affairs are £18,260,655 for DVLL and £16,937,288 for DPLL. But, once bank debt is accounted for, the amount actually owed to creditors is around £4.8 million.

As the business could not be sold as a going concern, the administrators’ focus has moved on to realising the best possible outcome for its secured and preferential creditors, including the Anglo Irish Bank.

But they have concluded that neither Donington company has enough property to allow much of a distribution to unsecured creditors, to the extent that they don’t plan to hold a creditors’ meeting – although there are provisions for creditors to force one if they wish.

The administrators are due to report on their progress within six months of the companies entering administration, or on exit from administration, whichever is sooner. Their next task is to chase any money owed to the two companies – including VAT refunds – and to sell the plant, machinery and equipment.

When that is done they will be able to decide whether there is enough money to set up a fund for unsecured creditors under section 176a of the Insolvency Act, which allows up to £600,000 to be diverted from the secured and preferential creditors for them.

But they have warned that this will be the only money available – and it’s not yet known how big the fund will be.

If it turns out to be so small a sum that the administrators decide it’s not worth bothering with, they will try to skip a creditors’ voluntary liquidation and simply dissolve the two companies – although the creditors could challenge that in court if they wish.

4 responses to “Donington advisors out of pocket after F1 scheme collapse”:

  1. F1 Fanatic round-up: 21/1/2010 | F1 Fanatic - The Formula 1 Blog Says:

    January 21st, 2010 at 12:06 am

    [...] Donington advisors out of pocket after F1 scheme collapse (Brits on Pole) [...]

  2. David R Says:

    January 21st, 2010 at 9:17 am

    I don’t quite understand which company is in liquidation; it’s Donington Ventures Leisure Limited, isn’t it? And this was the company set up to realise the F1 race at Donnington. It must therefore have bought or leased the ‘operational’ bit of Donnington cicuit from the Wheatcroft family as well, mustn’t it? I’m surmising this because DVLL apparently owes for St John’s ambulance and food catering services, debts which can only have been inncurred through actually running events at Donington.
    Surely it would have been better to keep the non-F1 operational bit of the track separate from the F1 development bit, so that whatever happened to the F1 bit it would not affect the running of Donnington at grass roots level.
    Or have I misunderstood completely?

  3. Andy Darley Says:

    January 21st, 2010 at 9:39 am

    It’s a bit of a mess all round…

    Gillett set up more than one company for his various Donington plans – nothing shady there, or particularly uncommon.

    I don’t think any of them are actually being liquidated yet but two, DVLL and DPLL, are in administration and it’s difficult to see any other outcome for them except to go that way.

    There certainly was some kind of separation going on, for example the administrators’ report mentions that they had no control over the staff after they’d taken over DVLL – that didn’t come until later in the month when DPLL, which employed the staff, also went into administration.

    And it’s DPLL, not DVLL, which owes the money to the St John – which suggests that exactly the separation you talk about did take place.

    But, ultimately, there’s a limit to how separate they could be when they were all part of the same big project run by the same directors.

    You can argue that Gillett should have set up a much more rigid firewall between areas of the business, with a guaranteed income for the circuit side of it that would ensure its survival if the F1 plan went belly-up – and heaven knows we’ve been critical of the man since, literally, the word go.

    But once administrators get involved and secured creditors start circling, you don’t get to choose where whatever money you have left gets spent. So it probably wouldn’t have made any difference in the long run.

  4. David R Says:

    January 21st, 2010 at 11:44 am

    Thanks for pointing out that the St John’s debts were incurred by DPLL, Andy.
    A sorry mess all round. Let’s just hope that the circuit doesn’t lay unused for another thirty-ish years before someone picks it up again.

 
  • McLaren eshop

    McLaren store

  • F1 gear (and more) at OnPole.com

    2012 F1 Merchandise from OnPole.com