The Rhineland Palatinate government decided it had run out of options to try to save the Nürburgring firm on Wednesday morning – because a hoped-for rescue package from the European Commission seemed unlikely.
State Premier Kurt Beck said the €13 million that had been requested was not expected to be approved by July 31. Therefore, “with greatest probability, bankruptcy would be applied for, for the end of the month due to lack of liquidity,” he said.
He criticised the Commission, which he said had given out positive signals on the matter just a few days ago, but had then simply stopped dealing with the matter.
“Not deciding on a European level means a lack of power to act for Rhineland Palatinate,” he said.
The Rhein Zeitung newspaper said on Tuesday it had heard from good sources that the European Commission was not going to rescue the Nürburgring GmbH firm.
The Rhineland Palatinate state government had asked the Commission to pump €13 million into the firm as part of a rescue package which would also seee the firm would defer payment on a €330 million loan from a state-owned bank.
But European competition authorities refused to approve the plan and the firm which owns the track will now go into administration.
Administrators will then soon be responsible for all contracts, whether this be with Bernie Ecclestone for the Formula 1 races or with concert organiser Marek Lieberberg for the Rock am Ring festival.
European authorities are already in the midst of checking whether more than €500 million has been funnelled into the racetrack and leisure complex in contravention of competition rules.
The Rhein Zeitung said that tax payers should expect to pay heartily for the situation, as the entire complex is said to be only worth €126 million – according to a study compiled by Ernst & Young for the state.
The figures show the firm is €413 million in debt, including €330 million borrowed from the state-owned bank and €83 million to share-holders, the paper said. The state could end up sitting on debts of around €287 million.
Story continues below…
The current season of events at the Ring will probably continue, but the future will depend on the administrators. They are obliged to get as much value out of the situation as possible for the creditors, the largest of which is the Rhineland Palatinate state.