Not so fast! F1 team liquidator right to reject proof of debt
UK: Not so fast! F1 team liquidator right to reject proof of debt
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The Court of Appeal agreed with the judge’s decision to uphold the rejection by a liquidator of part of his proof of debt, in the context of the liquidation of a Formula 1 team.
The caller “BWT” had entered into a sponsorship deal and became the main sponsor of the team for the 2018 racing season. The sponsorship payments amounted to around 15 million euros per year, most of which have been paid. been paid at the start of the racing season.
If BWT terminated the contract for the sake of convenience, a clause stated that payments already made could be retained by the team. However, should termination occur under other circumstances, payments made would be prorated to the date of termination, with a repayment obligation for the team.
The team ran into financial difficulties in February 2018. BWT continued to provide financial support and the parties signed an amendment deed in May, with new repayment obligations should certain contingencies arise. In July 2018, BWT terminated the Sponsorship Agreement under the Convenience Termination Clause.
The team went into receivership and then into liquidation. The liquidators rejected most of the applicant’s evidence of debt, in which she requested reimbursement of the installments.
At first instance, the judge concluded that the amending act did not affect the termination provision of the main agreement. BWT appealed.
The Court of Appeal dismissed the appeal, finding that the trial judge had taken into consideration the text and the context of the agreement and that there had been no error of interpretation.
The contracts had been drawn up by qualified lawyers. The amending act did not create an entirely new payment scheme, nor did it create new termination rights. The wording of the main agreement was clear and the amending act did not affect the convenience clause in the main agreement.
BWT Aktiengesellschaft v Force India Formula One Team Ltd (in liquidation)
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