Things were looking very rosy for McLaren at the start of the year but the coronavirus pandemic has left it looking for cash to avoid insolvency.
In May, it was confirmed the British company would cut its workforce by 25 per cent and McLaren is also looking to sell a stake in its Formula 1 team. Now, in an attempt to secure the money it desperately needs to survive, it has filed a lawsuit against some of its creditors.
Forbes reports that McLaren pays its suppliers 60 days after the end of the month that they submitted their invoice. As the company only sold 307 vehicles in the first quarter of the year, well down on the 953 cars it sold in Q1 last year, its pre-tax loss has increased to $165.56 million and it is struggling to pay these invoices.
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To raise the necessary funds, McLaren wants to release the security of its property and historic car collection so that it can sell them or secure another loan on them. The car manufacturer and racing outfit had previously used its headquarters and car collection as collateral for loans in 2017 when it bought out Ron Dennis’ stake in the company. The owners of McLaren’s bonds have, however, refused to release the assets from the security, prompting the lawsuit.
In legal filings issued prior to a hearing on Friday in London’s High Court, McLaren said that “the Proposed Transactions will enable the Group to access the additional liquidity that is required to ensure that the Group can continue as a going concern into 2021. This will provide a significant benefit to the creditors of the Group (by preventing a cash flow crisis and a value destructive insolvency).”
McLaren added that its properties and heritage car collection represent roughly a quarter of the group’s total assets.
The parties involved will look to resolve the issue through a two or three-day trial starting July 2.
