French car maker Renault on Monday announced it would buy a majority stake in the Lotus Formula One motor racing team, allowing the financially stretched outfit to stave off the threat of administration in a London court.
Lotus is facing legal action from HMRC, Britain’s tax authority, over unpaid taxes and was pinning its hopes on a buyout by former owners Renault to start sorting out its crippling debt and cash flow problems.
The High Court in London had given Lotus until Monday to make a deal with Renault that could potentially satisfy creditors, or face administration. At a hearing on Monday morning, lawyers for Renault and Lotus said a deal had been concluded overnight and they asked for an adjournment until Oct. 7 to allow time to finalise the transaction and deal with pressing issues.
Judge Colin Birss agreed to adjourn the case until Oct. 7 or the next available court date after that. Lawyers for Renault told Reuters that HMRC had not been paid what it was owed yet, but would be imminently. HMRC did not oppose the adjournment.
British-based Lotus, which in previous guises of Benetton and Renault won world championships with Michael Schumacher and Fernando Alonso, has struggled to keep operating normally in the current Formula One season. In Japan, the team were locked out of a hospitality unit intended for their use after failing to pay Grand Prix circuit organisers. Their mechanics had to be catered for along with staff at the VIP Paddock Club, as a favour.
While there were few details of the deal with Renault, the team’s prospects were clearly looking brighter after the announcement from the French company, which has been involved in Formula One as an engine supplier for years. Renault announced that it had signed a letter of intent on the potential acquisition of a controlling stake in Lotus with Gravity Motorsports S.a.r.l., an affiliate of Genii Capital, the Luxembourg-based firm that owns the Formula One team.
“The signature of this Letter of Intent marks Renault’s first step towards the project of a Renault Formula 1 team from the 2016 racing season, thereby extending 38 years of commitment of the brand to the world’s premier motorsport championship series,” Renault said in a statement.
Lotus have faced a series of legal actions this season, with bailiffs impounding their cars after the Belgian Grand Prix in a dispute with former reserve Charles Pic that was later settled. Lotus missed three payments to HMRC of 905,000 pounds ($1.37 million) each in relation to income tax and national insurance contributions that were due for the months of July, August and September.
In addition, a further 1.4 million pounds relating to Lotus’s tax affairs between 2009 and 2014 remains outstanding, according to HMRC, although that amount is disputed and is not expected to be paid in the immediate future.
Lotus also have multiple other creditors, some of whom were represented in court on Monday.