Motor racing-Crisis deepens at Caterham Formula One team

* Caterham management threaten to walk away

* Argument over team ownership explodes

* Former owner Fernandes says claims are 'garbage' (Adds Fernandes reaction, Ravetto quotes)

By Alan Baldwin

LONDON, Oct 22 (Reuters) - The Caterham Formula One team looked close to collapse on Wednesday with management threatening to walk away and take legal action against Malaysian founder Tony Fernandes.

An explosive Caterham F1 statement accused Fernandes of never completing a formal transfer of ownership after the team's sale to secretive Swiss and Middle Eastern investors was announced in July.

It said he was effectively still the owner and therefore responsible for the team.

The Malaysian, who runs the AirAsia (Kuala Lumpur: 5099.KL - news) airline and is also chairman of struggling Premier League soccer club Queens Park Rangers, responded on Twitter (Xetra: A1W6XZ - news) by telling his 895,000 followers: "If you buy something you should pay for it. Quite simple."

He told the BBC separately that the statement was 'garbage'.

With their cars seemingly stuck in the factory after a service company went into administration, and a weekend deadline looming for them to be sent to Texas for the next race, the team's prospects of survival look bleak.

"The seller has refused to comply with its legal obligations to transfer their shares to the Buyer," the statement asserted, identifying the buyer as Engavest SA.

"The Buyer has been left in the invidious position of funding the team without having legal title to the team it had bought.

"This is in total contradiction to the Seller's press release of 3 October 2014 which stated that Mr Fernandes and his Caterham Group had no longer any connection with the Caterham F1 Team."

Wednesday's statement followed a fraught week for the team, who are last in the championship and have yet to score a point since entering Formula One in 2010.

LEGAL ADVICE

Caterham Sports Limited (CSL (Other OTC: CMXHF - news) ), who under the previous owners were responsible for making the cars and dealing with suppliers, were taken into administration on Friday.

The new team management had argued that CSL was a separate entity to the entry holder, 1Malaysian Racing Team (1MRT), that they had acquired.

Joint administrator Finbarr O'Connell saw it differently and told Reuters on Tuesday that the race cars would not be allowed out of the factory without his permission.

"My legal advice is that I own the cars and won't be allowing the cars out of the factory until I reach an acceptable agreement (with the team)," he said, adding that the factory was being guarded by former Gurkha soldiers.

Bailiffs had already seized various items from the Leafield site earlier in the month.

Wednesday's statement said CSL going into administration had wreaked "devastating effects on the F1 Team's activities" while statements made by the administrators had also been "severely detrimental".

"After three months of operating the Caterham F1 Team in good faith, the Buyer is now forced to explore all its options including the withdrawal of its management team," the statement concluded.

"Lawyers have been instructed by the Buyer to bring all necessary claims against all parties, including Mr Fernandes who, as an owner, will run the F1 operation."

Team (NYSE: TISI - news) principal Manfredi Ravetto told the crash.net website that he was no longer in charge.

"I have been asked by my direct superior entities to step back and this I have to follow," he said. "So I presume that now the owners of Caterham F1 team -- who I understand is still Mr Fernandes -- has to make all the necessary steps from now on.

"What happens from tomorrow onwards is not under my control any more."

The team's drivers are Japan's Kamui Kobayashi and Sweden's Marcus Ericsson. (Reporting by Alan Baldwin, editing by Pritha Sarkar)