Bad news from Mallory

[Derwent Motorsp]

Mallory Park Motorsport Limited To Be Put Into Administration
30 Sep 13

It is with great regret that Mallory Park Motorsport Limited has today announced that the company has been put into Administration.

Mallory Park has been operating as a motorcycle and car race circuit for many years and has much history attaching to the circuit. In 1985 a highly restrictive Noise Notice was attached to Mallory Park Motorsport Limited ('MPML') embracing all circuit activities but, significantly, a number of the provisions within the Notice were very much open to interpretation.

MPML has enjoyed a long and fruitful relationship with Hinckley & Bosworth Borough Council over the years and a level of understanding had been established to work within the 1985 Notice. Regrettably, however, this arrangement was placed under scrutiny by local residents some of whom were new to the village, who made representations to HBBC to apply the rigid interpretation of the 1985 Notice.

MPML and the local authority worked extremely hard with the residents to find a compromise solution but, unfortunately, the council decided to prosecute MPML on five charges of the Notice during 2012 which involved operating on a Saturday over and above the four days agreed in the Notice. The court hearing took place in August 2013 and ruled that MPML was guilty of this breach on the five occasions, but MPML was given the right to take the establishment rights of the 1985 Notice to a higher court.

The immediate implication of the Court decision was to oblige MPML to observe the provision of the 1985 Notice, which allows only for 40 days racing on Sundays per annum (but with a dispensation to allow four Saturdays per annum) and testing on Wednesdays. MPML was accordingly obliged to cancel all track day operations, resulting in a significant loss of income (a situation also felt by local businesses and local employers) and use of the track for local community activities - young driver training etc. Overall, the imposition of such restrictions has inevitably led to MPML having a financially unstable business plan.

Following the Court case, MPML immediately implemented the highly restrictive conditions of the 1985 Notice, thus effectively reducing the circuit activity to two days per week. Significant losses were being incurred which no business can sustain. It was clear that a more dynamic approach needed to be taken to overcome the significant hurdles and two weeks ago MPML developed an innovative three stage Recovery Plan to take Mallory forwards which would hopefully meets the wishes of the residents and form the basis of a viable business.

Very constructive dialogue was held with the Leader of HBBC and senior officials and we were receiving very encouraging reactions from them to the Plan. A fundamental component of the Plan was the agreement of the Land Owner to reduce the annual lease rental, which had risen by over 40% over the last eight years and had reached untenable levels. Very regrettably, despite intense work by the MPML board, the Land Owner - Titan Properties Ltd - refused to make a substantive offer to allow the Recovery Plan to proceed.

British Automobile Racing Club were keen to support MPML (and did so up to the final race meeting yesterday by paying for certain essential supplies allowing the meeting to place) and indeed would have supported MPML to ensure all its trade creditors were paid. To that end, it needed the support of the Landlord with a sustainable rent but, regrettably, this was not possible to achieve.

Accordingly, having no firm visibility into 2014 and beyond, MPML directors had no option but to place the company into Administration.

The administrator, Ian Robert of Kingston Smith & Partners LLP, commented: "I will be working with all the stakeholders to ensure that Mallory Park will see racing again. I hope the administration process can assist in finding a solution which will be beneficial to all parties concerned."

He continued: "To that end, I will be negotiating with the landlord and the council, with the support of the BARC, to ensure that racing can be enjoyed at Mallory Park for years to come. Although it is early days, I am hopeful that, once a solution to the lease is found, all of the company's creditors should receive a substantial dividend, which I understand is very much the driving force behind the continued support of the BARC."

[Moneyseeker]

I wonder if MSV may take it on as clearly this will be a key time to renegotiate the lease as currently there is no tenant, so no income...

[AndyS]

Well there is a tenant but one that's in administration so the administrator becomes the tenant in affect. If my understanding is correct its down to the Administrator as to what they want to do with the lease. Its an essential part of the business and will only be dis claimed should the Administrator be unable to find a buyer for the business. Again if my understanding is correct it could swing both ways, a buyer could be found but could make a reduction in rent a condition of the purchase, the current leaseholders (MPML) could in affect buy the business back having lost any debt and on re negotiated lease terms or the Administrator could declare the business unsaleable and disclaim the lease.

The last option could leave the circuit either open to a new tenant then swooping in, maybe Mr Meek might come back to run it or sadly it could end up moth balled. Either way it'll take time to sort out and they'll be a lot posturing by various parties I'm sure. Meek won't want to risk losing a rental income but equally won't want to see it eroded too much. The business should carry on but in the hands of the Administrator so track activity should continue for now as it hasn't been liquidated.

I must add that I am not an Administrator and only have cause to deal them from time to time. Above is how best I understand the situation from my limited knowledge of how these things work. I'm sure they'll be others far better versed than me in these matters.

[delta]

Thanks Andy S for that even. I can. Understand what's going on now

[AndyS]

Originally Posted by delta

Thanks Andy S for that even. I can. Understand what's going on now

No problem, although a very basic layman's version which is correct to the best of my knowledge. I must add all administrations I have been involved in have been different, some can last an extended period of time (years in some cases) others are done in a matter of days as a buyer comes out of the woodwork very quickly (often the original company but under a different name having already cut a deal prior to the administration with their Landlord and other parties owed money) or the Administrator liquidates the business reasonable quickly as it is too far gone. Again that's a very basic way of looking at it and it can be far more complicated in reality.

[morninggents]

Much depends on what terms the lease contains. It may have a clause that the lease reverts to the lessor in the event of administration. I think that was probably the case at Donington a few years ago.

Whatever, let's hope it gets resolved quickly and racing/testing resumes as one in the eye for the nimbys.

[rogerwills]

Originally Posted by AndyS

No problem, although a very basic layman's version which is correct to the best of my knowledge. I must add all administrations I have been involved in have been different, some can last an extended period of time (years in some cases) others are done in a matter of days as a buyer comes out of the woodwork very quickly (often the original company but under a different name having already cut a deal prior to the administration with their Landlord and other parties owed money) or the Administrator liquidates the business reasonable quickly as it is too far gone. Again that's a very basic way of looking at it and it can be far more complicated in reality.

Generally in these situations nobody comes out of it very well except for the administrators who have their fees guaranteed.

A sad set of affairs.

[p261brm]

Originally Posted by delta

Thanks Andy S for that even. I can. Understand what's going on now

Glad you do mate,cos I do not
Country full of young un-employed, in an area that needs employment, and all the visionaries can do is close a company down, build a load of affordable houses on the site, give or sell to un-desirable tenants, and give the Sunday morning lawn mower brigade something to really shout about.

[delta]

Sure will be a sad day if the track does close. Been going too mallory for nearly 40 years. .1st race win and some very happy memories. But hey ho fat lady not singing just yet.

[andrewc]

From what I've read the stumbling block was that BARC and Titan / Meek could or would not agree a reduction in the rent that BARC has to pay.

Maybe Meek has decided that its time for a change, and wants to break free of the current BARC/MPML deal, is playing hardball, but has other suitors lined up.

Whilst many would look at MSV as being a possible candidate, Castle Combe, Rockingham and Donington are independent of BARC and MSV.

[AndyS]

The Administrator seems to be indicating that track activity is to be cancelled, which is a surprise as I would have thought they would have wanted to keep some income going through the books. The posturing seems to have started already with the Administrator making it very clear that the rent is the issue and the Landlord seemingly not wanting to play ball at this stage. A bit of a stand off seems to be developing.

[VIVA GT]

Originally Posted by p261brm

Glad you do mate,cos I do not
Country full of young un-employed, in an area that needs employment, and all the visionaries can do is close a company down, build a load of affordable houses on the site, give or sell to un-desirable tenants, and give the Sunday morning lawn mower brigade something to really shout about.

Whoah there! You must have turned over two pages at once.
As far as I'm aware there are no plans to build anything on the land that we know as Mallory Park, I'm sure that Chris Meek has stated publicly that he'd never sell the land for housing, plus, if the area was developed for housing there would be more houses on 'the Park' than there is in Kirkby Mallory itself, which I am sure would not be allowed within the local planning area.
What's happened so far is that the company who have been running Mallory Park for the past few years have gone into administration, and declared that they cannot run the company profitably under the current planning rules. These are rules that should have been followed since 1985, and the fact that they so blatantly broke those rules is what's started all of the hoo - har in the first place.
Hopefully a more professional organisation will come along and be able to (maybe) negotiate a reduction in the lease, work more closely with the local council and the local residents to (maybe) get an increase in the number of days that the circuit can (legally) operate, and come up with more ideas for things that the circuit can be used for that won't be so intrusive, or noisy to give any cause for complaint from the locals.
For example, I cannot understand why they've had to stop using the circuit for young driver training (as I've read somewhere). If this is what I think it is, under-age people being given the opportunity to be taught to drive in normal road cars, and at normal speeds will create no more noise than a car park, and will not involve thousands of people, so should create very little impact locally, but provide an excellent service for the area. Road safety is a big thing actually and politically, it would be a very positive thing for 'The Circuit' to be seen to be getting involved with.
Just my ten'pennyworth!

[Lancsbreaker]

Originally Posted by VIVA GT

Just my ten'pennyworth!

There's inflation for you.....used to be tuppenceworth in my day

But, yes, I agree broadly with what you say

[David Stallard]

This is what happens when you get a- greedy and b- lose all common sense.

WHY? obvious, motocross on the hill above the circuit! I love motor sport but trying to watch / cover the track with the never ending high pitch whine of mx bikes actually had me wanting to call it a day.

A real shame as it's one of the great 'old' circuits but to honest - brought it on themselves - period.

.DAVID.

[Pescara Productions]

Originally Posted by AndyS

The Administrator seems to be indicating that track activity is to be cancelled, which is a surprise as I would have thought they would have wanted to keep some income going through the books. The posturing seems to have started already with the Administrator making it very clear that the rent is the issue and the Landlord seemingly not wanting to play ball at this stage. A bit of a stand off seems to be developing.

If track activity is being halted then this could be a sign of Titan getting to work on the new bit of track that they talked of. That way Meek can get it ready sooner and have noise tests conducted at the beginning of next year and see what levels it produces. Then he can get a new agreement drawn up allowing more days and he can then bring in a new management that won't be incompetent and annoy everyone. The plot thickens.

[AndyS]

Originally Posted by Pescara Productions

If track activity is being halted then this could be a sign of Titan getting to work on the new bit of track that they talked of. That way Meek can get it ready sooner and have noise tests conducted at the beginning of next year and see what levels it produces. Then he can get a new agreement drawn up allowing more days and he can then bring in a new management that won't be incompetent and annoy everyone. The plot thickens.

Yes he could but if I'm understanding the situation correctly the lease is still in place with the BARC/MPML still as the tenants but in the hands of the Administrator. As leaseholders they are afforded certain rights within law, or if the lease is opted out of the various laws, under the terms of the lease. Although the Landlord owns the land he cannot go and start making changes without their permission/agreement as it is altering the terms of the lease. In the current situation that doesn't seem likely. He could therefore only make any changes if he had agreed that they could surrender the lease or if the Adminstrator liquidates the business and disclaims the lease, neither of which are quick processes or would appear to have happened yet.

As with everything unless you hear both sides of the story it is impossible to tell what has or hasn't been said and what is actually going on behind the scenes. Time will tell but I suspect its not going to be a quick process. I personally think we will see motorsport continue at Mallory but next season looks a bit iffy at this stage.

[brands]

Originally Posted by David Stallard

This is what happens when you get a- greedy and b- lose all common sense.

WHY? obvious, motocross on the hill above the circuit! I love motor sport but trying to watch / cover the track with the never ending high pitch whine of mx bikes actually had me wanting to call it a day.

A real shame as it's one of the great 'old' circuits but to honest - brought it on themselves - period.

.DAVID.

Agree.
I had a bad feeling when BARC got involved.

[Pescara Productions]

I saw a comment to do with Mallory recently from a guy who has some connections with the BARC who has said that the BARC themselves are going into/close to going into voluntary administration. This is probably just a rumor but who knows, it could be true. Imagine the havoc this could cause for championships like the BTCC. I could understand if they were in financial trouble too as all the new clubs that are popping up and how the BARC has had track troubles with Croft and Mallory recently might have put them in the wrong financial situation at the wrong time.

But like I said it could just be a rumor.

[Lancsbreaker]

From Mallory's FB page......hopeful?

Mallory Park Future: Talks “Encouraging”

Ian Robert of Kingston Smith & Partners LLP, the Administrator to Mallory Park (Motorsport) Limited, said today (Oct 3) that there have been “encouraging” talks with Hinckley & Bosworth Borough Council and the landlord aimed at securing the future of the racing circuit.

He explained: “We are still very keen for Mallory Park to host racing again and are in discussions with a number of interested parties. There also now appears to be a way forward with the council and there have been useful talks with the landlord. These negotiations will continue; but this is a complex problem.”

Ian said that he could give no assurances about the future. “Although the talks have been encouraging and whilst Mallory Park is open for business, we are unfortunately unable, for insurance and administrative reasons, to continue with any track events.

“This situation may change. Whilst all track events next week have been cancelled, we are taking future events on a week-by-week basis and will be updating the website with information accordingly. Non-track events are unaffected.”

The Chris Walker Race School seminar on Wednesday, October 10 has been cancelled.

[midgetman]

Well they would say that wouldn't they? Whether it be to bolster the value of the company to sell it, or to keep the candle burning for a future new company, the administrators have to be positive.

I presume the insurance company won't give cover to a company in administration hence the end of track activities.

[Dave Brand]

Originally Posted by Pescara Productions

But like I said it could just be a rumor (sic).

Maybe it would have been better not to repeat it?

The situation at Mallory is bad enough with the spreading of unsubstantiated, possibly malicious, rumours.

[VIVA GT]

Originally Posted by Dave Brand

Maybe it would have been better not to repeat it?

The situation at Mallory is bad enough with the spreading of unsubstantiated, possibly malicious, rumours.

I appreciate what you're saying Dave, but to be honest, all that practically anyone (or everyone) is doing is commenting on the situation based on what we think.
If the BARC are in financial difficulties it could have an effect on the outcome, or could have even contributed towards the decline in the first place if it meant they were worrying about what tey would consider to be far more important things to them than just Mallory Park.
By the same token, if Titan Properties were thought to be in financial difficulties (which to the best of my knowledge, they're not) that would also have implications to the outcome of what heppens to Mallory Park.
In my opinion...

[TimRTC]

Originally Posted by Pescara Productions

Imagine the havoc this could cause for championships like the BTCC.

If anything the BTCC would surely be among the least affected, would not be hard for them to spin off and do things by themselves - I'm sure MSVR would be happy to take them on, even if it did mean we'd drop Croft and Thruxton in favour of extra visits to Oulton and Brands Hatch.

It is the plethora of smaller series that would be hardest hit were the BARC in any trouble.

[Derwent Motorsp]

What non track activities are there at Mallory?

[VIVA GT]

Originally Posted by Derwent Motorsp

What non track activities are there at Mallory?

Fishing? (Although I think the fishing lakes are run by a totally different company). Plus, there are a number of small industrial units there.