Lloyds directors risk prosecution as Virgin heads for F1 scrapheap

The Virgin Racing team could lose place on the starting grid if papers are not delivered by today
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Directors of Lloyds risk prosecution by Companies House if they fail to deliver documents connected to the Government-owned bank's investment in the Virgin Racing Formula One team by today.

Lloyds Development Capital (LDC), the bank's private equity arm, bought an undisclosed stake in Sheffield-based Virgin Racing in 2009 and gave it a £6.5m loan, according to documents filed by the team's parent, Manor Holdco. In November last year, the Russian sports car manufacturer, Marussia, bought a controlling interest in the company from LDC and Corvina Holdings, an investment vehicle owned by Sir Richard Branson's Virgin group.

The sale left LDC with a minority stake although its representatives occupy two of the six slots on the board of Manor Holdco. They are LDC's chief executive Darryl Eales and Carl Wormald, the head of its Manchester office. On 25 October, Companies House sent a notice of dissolution to them and all of the company's other directors, including team principal John Booth and Marussia's UK managing director, Andy Webb.

It was triggered by Manor Holdco's failure to file its 2010 accounts which were due on 28 July this year. Under the Companies Act, a company can be struck off for not filing accounts. The delay has already landed the company with a £750 fine and failure to file accounts is a criminal offence for which all the directors are liable. Manor Holdco was incorporated in late 2009 and has never lodged any accounts with Companies House.

In response to the dissolution notice, the directors committed to filing the accounts within four weeks and Companies House agreed to suspend its strike-off action. "We normally put a hold on for 28 days," Companies House said, adding "28 days from the date that we suspended it, which was 26 October, is 23 November". However, the accounts had still not been filed yesterday and, if this is not done by today, Companies House says the next step would be to prosecute the directors.

"If they've promised to file a document and they don't, it will go through prosecution. They go through the courts for prosecution and if they don't bring it up to date, they could close the company down. So they've got until Wednesday really."

This could push Virgin Racing out of Formula One since the company facing dissolution owns Manor Grand Prix Racing limited, the direct signatory to the Concorde Agreement, the contract which grants the team a slot on the sport's grid. Before Virgin bought into the team in 2009 it was called Manor GP, hence the name of the companies which own it.

The team joined Formula One the year after Virgin's acquisition and it has failed to score a single point since. It currently lies last with one race left this season. Marussia and LDC declined to comment while a team spokesman described the action as "a procedural communication from Companies House".