Aston Martin’s lenders are threatening to take the luxury carmaker to the High Court over its decision to shift key assets to the Cayman Islands.
Bondholders, who are collectively owed £1.3bn, accuse the company of placing assets beyond the reach of creditors tied to the London-listed group.
Aston Martin is understood to have transferred intellectual property rights, including the right to the carmaker’s name, from its UK business into a new Cayman Islands subsidiary.
The move has raised concerns that Lawrence Stroll, Aston Martin’s owner, is attempting to capitalise on the brand’s value while leaving the company burdened with significant debt.
A source close to the bondholders compared the tactics to those used by American private equity firms, calling them “unprecedented” for a listed UK company.
The same source claimed the deals appeared to be “stripping the company of its assets in plain sight.”
Following the asset transfer, Aston Martin borrowed £450m through the Caribbean subsidiary from HPS Investment Partners, a BlackRock-owned private credit provider.
The carmaker also agreed an option to draw a further £100m in exchange for a 50.1 percent stake in assets, including branding and naming rights, granted to Authentic Brands, the American owner of Reebok and Ted Baker.
Aston Martin stated the £550m refinancing “significantly strengthens our liquidity,” but bondholders remain deeply alarmed by the structure of the arrangement.
Creditors fear that in the event the main group defaulted on its debts, they could be left with a UK carmaking business that has no rights to use the Aston Martin name.
Scott French, HPS’s co-founder, sits on the boards of both Aston Martin and Authentic Brands, while HPS is also a minority shareholder in AMR GP Holdings.
Through his Yew Tree Consortium, Canadian billionaire Stroll is the biggest shareholder in the main Aston Martin group and also controls F1 team AMR GP Holdings.
AMR GP Holdings recently paid £50m to Aston Martin to acquire naming rights for Formula 1 “in perpetuity,” adding further complexity to the web of relationships involved.
There is no suggestion of wrongdoing by Stroll, French, or HPS.
Bondholders say Aston Martin has refused to confirm exactly what assets were transferred to the Cayman Islands entity or explain the rationale behind the deal.
The company has told creditors holding security over the main London-listed group that they have no claim on the new subsidiary, even though it remains part of the wider group.
Creditors allege the carmaker is attempting to circumvent obligations under its bond agreements, which required Aston Martin to provide security over certain assets in the event of any default.
In a letter before action sent on Sunday, bondholders claimed Aston Martin was in breach of its bond agreements and section 423 of the Insolvency Act, a UK law designed to prevent businesses from hiding assets or selling them at undervalue to cheat creditors.
Creditors have also questioned whether Aston Martin’s board acted in line with its fiduciary duties when approving the deal.
Bondholders reportedly offered alternative financing to Aston Martin on what they claim were more favourable terms, but the board viewed the proposal as too last-minute and not in the company’s interests given its urgent need for cash.
