At Parker Andrews, we believe that one of the most important educational aspects of administration and business insolvency is that no organisation is immune to financial hardship. It’s easy to believe that larger organisations live within a bubble in which they cannot be harmed by financial difficulty, protected by years of high-level activity and the strength of their brand. But this simply is not true.
A prime example of this would be the Lotus F1 team, who this year has struggled dramatically with administration worries.
Lotus F1’s Financial Woes
Lotus F1’s troubles started some time ago when collective debts culminated in Lotus owing HMRC £2.7million in PAYE (income tax and national insurance) in September. As AUTOSPORT reported, Lotus’ financial worries had seen them unable to pay the £27,000 needed to unlock their hospitality unit at races earlier in the season, with Bernie Ecclestone being the unlikely saviour, offering catering for the team mechanics.
The eventual fear of administration was eventually overcome recently when Renault reached an agreement to purchase the beleaguered team, and repay all debts in full. But the entire saga represented a close call for the team.
Are There Lessons to be Learnt?
Suggesting that there are lessons to be learnt from the story of Lotus F1’s close call with administration is perhaps a little bold. Instead, the saga represents more of a cautionary tale for businesses of all sizes. As we stated earlier, there is no ‘safe’ company. Market conditions can change dramatically and swiftly, which can severely affect a business’ financial situation. As such businesses should always look to spend time forecasting correctly and ensuring that they make the most of the times when market conditions are favourable.
Parker Andrews wishes Lotus F1 all the best for the coming season.
If you would like to discuss administration or business insolvency, get in touch with the Parker Andrews team today. You can call us on 0800 612 7593 or you can use our contact form.