There's a real chance the British carmaker could go under.
McLaren is one of the most prestigious brands in the motoring world, with a rich Formula One racing history and one of the fastest cars ever made under its belt in the F1. It also produces highly desirable metal today in the form of the 765LT, the luxurious GT, and the hardcore Senna. However, things have not been right at the British company for a while now. The company's ambitious plan for growth is behind schedule thanks to the pandemic and things don't seem to be getting much better. Still, a massively successful company that produces hyper exclusive metal like the Speedtail should be able to weather such storms, right? Well, the loss of revenue, debts, and disagreements among shareholders could create more of a problem than McLaren can handle.
In a new report released by Forbes this week, it has been made clear that the situation is truly dire and that McLaren could go under. The Formula One team has not been performing as well as it used to, and when Ron Dennis stepped down, McLaren had to borrow the $333 million needed to buy Dennis' shares. This sort of thing isn't uncommon, but the pandemic seems to have hit the brand at the worst time. Things were looking up at the start of the year, so much so that McLaren had planned to produce less cars to make the brand more exclusive.
However, the $368.8 million that shareholders pumped into the brand to help it scale down had to be redirected because of the global virus pandemic and the obvious negative effect that this had on sales and income. In the first quarter of 2019, McLaren had sold 953 cars, but in the same period this year, just 307 left dealership floors. The problem was compounded by the fact that McLaren has 60 days to pay suppliers from the date of invoice, and now the chickens have come home to roost.
So what's the way out? Well, McLaren has taken the matter of being allowed to release the security of its historic car collection and property to court. The idea is that selling these assets or securing a loan on them will keep McLaren afloat, but shareholders fear that this will leave the company almost worthless and will result in insolvency anyway. In court filings, the urgency of the matter has become apparent with McLaren needing declaratory relief by 17 July 2020. Because of how long it takes for paperwork to be processed and funds to be transferred, it actually needs this done by the 10th. Thus a court cased that would normally take months needs to be finalized in a couple of days. So if you're a billionaire who likes supercars, perhaps now is the time to find a way to help.