You might have thought that the Caterham F1 team, currently sitting dead last in the standings without a single championship point to its name, had already hit rock bottom and couldn't sink any lower. But apparently it has. As we reported just recently, Caterham Sports Limited – the factory that produces the F1 cars that the team fields in the FIA Formula One World Championship – was facing bankruptcy. And now, it seems, the team itself could fall apart as well.

The issue appears to revolve around an ownership dispute. Several months ago, Caterham boss Tony Fernandes sold the team to an independent consortium. But according to the new owners, Fernandes has failed to actually transfer ownership. As a result, the management team is threatening to walk if they don't actually get control of the team they claim to have bought. The team recently changed its senior leadership just months after taking it over from Fernandes, and has been switching drivers back and forth between veteran Kamui Kobayashi and three-time Le Mans winner André Lotterer.

For its part, the Caterham Group headed by Tony Fernandes asserts that the ownership transfer of the F1 team was contingent on the new owners paying its staff and creditors, something which the automaker asserts the team has failed to do. Reached for comment, Fernandes said: "If you agree to buy a business, you must pay its bills. They have breached that promise and now, sadly, it is others such as the employees and the fans of the Caterham F1 team that will suffer if the team ceases to race."

"We genuinely believed, at the time, that the sale of the team was the best route for the staff and creditors of the Company, as we felt it secured its long term future," added Caterham Group CEO Graham Macdonald. "However, it appears to me that they never had any intention of paying these liabilities."

The ownership dispute only serves to further endanger the team's future viability. But with other parties vying for a spot on the grid, we're sure the team could sell its license easily enough. The only question is over who would get the proceeds. Scroll on down to read the statements from both parties.
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CATERHAM F1 TEAM STATEMENT
22 October 2014

On 29 June 2014, Caterham Enterprises Ltd, Caterham (UK) Ltd and Sheikh Mohamed Nasarudin (Seller) and their shareholders Tony Fernandes and Datuk Kamarudin Bin Meranun entered into a Sale and Purchase Agreement (SPA) with Engavest SA (Buyer) with regards to 1Malaysia Racing Team Sdn Bhd/Caterham F1 Team.

Since the date of the Agreement, the Seller has refused to comply with its legal obligations to transfer their shares to the Buyer. The Buyer has been left in the invidious position of funding the team without having legal title to the team it had bought. This is in total contradiction to the Seller's press release of 3 October 2014 which stated that Mr Fernandes and his Caterham Group had no longer any connection with the Caterham F1 Team.

The administrators of Caterham Sports Limited have been appointed on behalf of Export-Import Bank of Malaysia Berhad (Exim), a creditor of Mr Fernandes and the Caterham Group. The Buyer has no connection with Exim. Caterham Sports Ltd was a supplier company to the Caterham F1 Team. Very regrettably, the administrators' appointment has had devastating effects on the F1 Team's activities. Since their appointment, the administrators have released various press statements which have been severely detrimental to the management of the Caterham F1 team.

After three months of operating the Caterham F1 Team in good faith, the Buyer is now forced to explore all its options including the withdrawal of its management team. Lawyers have been instructed by the Buyer to bring all necessary claims against all parties, including Mr Fernandes who, as an owner, will run the F1 operation.

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STATEMENT ON BEHALF OF TONY FERNANDES AND CATERHAM GROUP

Tony Fernandes, Caterham Group co-Chairman:

"In June 2014, I decided, together with my co-shareholders, to sell my stake in the Caterham F1 team. We agreed in good faith to sell the shares to a Swiss company named 'Engavest' on the basis that Engavest undertook to pay all of the existing and future creditors, including the staff. The continued payment of staff and creditors was so important to me that I ensured that the shares would not be transferred to the new buyers unless they complied with this condition.

"Sadly, Engavest has failed to comply with any of the conditions in the agreement and Caterham Sports Ltd (the UK operating company of the F1 team) has had to be put into administration by the bank, with large sums owing to numerous creditors. Our agreement with Engavest was very clear: there was no legal obligation to transfer the shares to them unless certain conditions - which included paying creditors - were met. Those conditions have not been met. Our lawyers have asked Engavest several times to comply with these conditions but they have failed to engage.

"If you agree to buy a business, you must pay its bills. They have breached that promise and now, sadly, it is others such as the employees and the fans of the Caterham F1 team that will suffer if the team ceases to race. I sincerely hope that this will not be the case and that a solution can be found."

Graham Macdonald, Caterham Group CEO:

"We genuinely believed, at the time, that the sale of the team was the best route for the staff and creditors of the Company, as we felt it secured its long term future. The whole agreement with Engavest was based around a low consideration for the business, with easy payment terms so that creditors and staff could be paid. The buyers were made fully aware at the time of all outstanding liabilities. However, it appears to me that they never had any intention of paying these liabilities. I go on to question how anyone who was interested in the long term future of the business would appoint one of their cleaners – Constantin Cojocar – as the sole director and shareholder of the UK operating Company?"

"We continue to see claims and counter claims from the F1 team which are totally unfounded. Not only have they failed to pay the creditors (and have even left our shareholders to pay some of the creditors on their behalf), but they have failed to pay us anything for the use of our factory and site, or anything for the use of our brand name. In short the new owners have paid us nothing and now the administrators have been appointed they want to walk away from their liabilities."

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