Is Force India insolvent and on the brink of collapse?

Motor Racing - Sahara Force India F1 Team Livery Reveal -  Mexico City, Mexico

The latest Formula 1 team in serious peril and facing a possible shutdown is Force India, according to a well connected insider.

The Silverstone based team announced that it is sitting out the first test of the 2015 pre-season at Jerez.

The reasons for the decision have not been well explained, but technical boss Andrew Green has said it was a “conscious decision” to trade the test for more “development time”.

But insider Ralf Bach, who writes for Sport Bild and TZ Munchen, is reporting that the very future of the team is “far from certain”.

Bach reports that at the most recent F1 strategy group meeting in London, it emerged that Force India is facing financial collapse and is currently insolvent.

Motor Racing - Formula One World Championship - Sahara Force India F1 Team Headquarters - Silverstone, England

This means that the 2015 car is delayed because important suppliers have not been paid and are starting to demand payment before releasing parts.

It also emerged a few years ago that the Silverstone based team were notoriously slow in paying their suppliers, who have been patient and loyal, but this goodwill is now running thin.

Bach added: “If no money flows in the next four weeks, it is said even the opening two races in Australia and Malaysia are endangered.

“The team is for sale,” he wrote, “and Renault is interested as it wants to cut the cord to Red Bull and once again have a bigger presence in formula one.”

The off-track financial troubles of Vijay Mallya are well documented, and Force India’s co-owner Subrata Roy is even in jail.

Motor Racing - Formula One World Championship - Russian Grand Prix - Qualifying Day - Sochi, RussiaAs of October 2013, it had not paid salaries to its employees for 15 months, had lost its license to operate as an airline, and owed more than $1 billion in bank loans.

Kingfisher Airlines, established in 2005, was a major business venture launched by Mallya, but it eventually became insolvent and had to be closed down.

In August 2014, Mallya was declared ‘Willful Defaulter’ along with his three other directors of King Fisher Airlines by United Bank of India.

Earlier this year amid ongoing action relating to Kingfisher, a Mumbai court oredered that Mallya can no longer leave India unless he submits a detailed itinerary 48 hours in advance.