As the financial crisis at Aston Martin deepens, a legal adviser who specialises in commercial disputes has told Just Auto that Aston Martin’s current creditors want to prevent the business from dissipating its most valuable asset: its brand name.
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Nick Stockley, partner at Mayo Wynne Baxter, said: “If Aston Martin’s financial woes push it into formal insolvency, its brand name will be what attracts buyers as part of the insolvency process.
“The proceeds from the sale of the brand name will be used to pay the debts to the current creditors.
“If the Aston Martin name has already been sold, the creditors will stand to lose out completely.”
This week it emerged that a group of bondholders have warned Aston Martin they may begin legal proceedings over its £550m financing arrangement with HPS Investment Partners, which is associated with private equity giant BlackRock.
According to a report in the Financial Times, the bondholders have sent a “letter before action” to Aston Martin’s board, warning that legal proceedings may follow.
They are seeking to unwind the HPS arrangement and block the transfer of certain intellectual property.
Stockley points out that the creditors’ opposition to the terms of this new lending is akin to a ‘freezing injunction’.
“This is where a creditor applies to court for an order that formally prevents a debtor from getting rid of its assets.”
Stockley says the creditors have a good argument to oppose Aston Martin from transferring its valuable assets. “It is clear the business is in significant financial difficulty and formal insolvency could be disastrous,” he points out.
However, he also points out that if Aston Martin cannot get further funding, the creditors will ultimately lose out. “Therefore, opposing the sale of the brand name could be completely counter-productive.
“Aston Martin’s challenge will be to convince its creditors that unravelling the further lending will create more harm than good.”
