INDIANAPOLIS — Champ Car World Series LLC, the company that kept alive the turbocharged open-wheel racing formula known as Champ Car for the last four years, filed for Chapter 11 bankruptcy in United States Federal Court on March 5.
Represented by attorney Jeffrey A. Hokansan of the Indianapolis firm Hostetler & Kowalik, Champ Car said it will stage its final event April 20 in Long Beach, Calif., and that it intends to continue in the management and possession of its business and property as a debtor-in-possession until assets can be sold to pay off creditors.
The company’s bankruptcy filing estimated debts of less than $10 million, topped by $1.825 million owed to engine manufacturer Cosworth, Inc. Champ Car’s assets are estimated at $10-$50 million.
The filings contain additional business details about the unification of American open-wheel racing under the Indy Racing League banner.
An affidavit from Gene Cottingham, vice president and chief financial officer for Champ Car World Series LLC, stated the company’s four-man board of managers “determined that it is no longer economically feasible to sustain an open-wheel series and that (Champ Car) did not have the funds to operate the series in 2008.”
The board of managers includes Kevin Kalkhoven, Gerald Forsythe, Paul Gentilozzi and Dan Pettit. Champ Car’s majority owners are Kalkhoven (through a company called 21st Century Racing Holdings LLC) and Forsythe (and his company Willis Capital LLC).
Cottingham further noted that Champ Car determined “…it is in the best interests of the sport of open-wheel racing in general to sell certain assets to the IRL and to unify the sport of Indy-style, open-wheel racing under the IRL, all before the start of the 2008 season.”
The affidavit revealed that the Champ Car board of managers authorized the decision to file bankruptcy on Feb. 14, exactly one week before Kalkhoven and Forsythe executed a Memorandum of Understanding for Champ Car to assign race-sanctioning contracts and  sell substantially all of its intellectual property and other intangible assets, as well as the Champ Car Mobile Medical Unit, to the IRL for $6 million.
The MoU includes a non-compete covenant for Forsythe and Kalkhoven, who are each slated to receive $2 million, provided they pay certain expenses associated with the promotion and operation of this year’s Long Beach race, and show commitment and support to the IRL.
The agreement also calls for the long-term preservation of the Long Beach race, which is managed by a holding company owned by Kalkhoven and Forsythe called Aquarium Holdings LLC. The cost of staging this year’s Long Beach race will be shared by Champ Car, the IRL and Kalkhoven and Forsythe.
The IRL has assumed responsibility for production and telecast costs for the Long Beach race, which is scheduled to be broadcast on ESPN2.
“The cooperative effort to stage the Champ Car finale will preserve the goodwill associated with the Long Beach race and help to ensure that IRL can add Long Beach to its schedule beginning in 2009,” stated Cottingham.
Ironically, Champ Car’s four-year history started in the same Southern Indiana branch of Federal Bankruptcy Court on Feb. 2, 2004 when Judge Frank J. Otte approved the sale of the assets of Championship Auto Racing Teams, Inc. to an ownership group formed by Kalkhoven and Forsythe.
Judge Anthony J. Metz III has been assigned to preside over Champ Car’s current case.