MG Rover 'preparing for the end'

The bleak message was given to representatives of hundreds of the firm’s thousand-or so creditors of the firm at a meeting in Birmingham where it was also disclosed that those owed cash by MG Rover would see a “nil or negligible” return on the debts.

Reports have suggested that this could be as low as 1p in the pound, although no figure was specified.

Creditors of MG Rover’s sister company, Powertrain, received slightly better news, however, with a potential 5p in the pound or more on their debts.

Discussions were also continuing into the sale of the engine maker, raising the prospect of the return of limited production.

Administrator Tony Lomas told a news conference after the meeting that there was “massive public interest” in MG Rover’s plight both in the UK and abroad.

Claims totalling more than £1.4 billion had been submitted and were likely to increase, he added.

But there were few “viable and realisable” assets because bosses had disposed of many in a bid to fund losses in car making.

And although 4,500 workers at Longbridge were made redundant, there were still “substantial holding costs” in retaining the sprawling site.

“There will not be enough funds to carry on as a going concern for much longer. We have instructed to begin to prepare for the sale of assets on a piecemeal basis,” Mr Lomas said.

A “watershed” was likely to be reached in the next two to three months, he added.

About 630 interested parties have contacted the administrators since MG Rover collapsed in April but only nine of these had convinced PwC that they had enough funds.

But realistically just three of these had any chance of succeeding.

Shanghai Automotive Industry Corporation (SAIC), with whom MG Rover had been trying to secure a joint venture before the collapse, had expressed an interest only in Powertrain.

Another potential obstacle for a buyer of MG Rover would be intellectual property rights to the Rover models, which SAIC claim to own.

That would be an “important issue” for interested parties, said Mr Lomas.

Creditors attending the meeting admitted it was unlikely they would recover anything more than a fraction of their debts.

Some also renewed calls for MG Rover boss John Towers to face up directly to creditors.

Paul Snook, representing National Tyre Service Ltd, said Mr Towers should be chairing the creditors’ meeting rather than a “stooge“.

He added: “There really was little information about Mr Towers. The guy has got to turn up and start answering some questions.”

John Alexander, whose components business Lander Automotive is owed just over £100,000 by both MG Rover and Powertrain, agreed Mr Towers and other directors should be more accountable.

“One of the things that was raised at the end of the meeting was if the company goes into liquidation and there’s a further, similar meeting, he (John Towers) should be there at the front to answer questions.”

He was not surprised Mr Towers was not there, but he added: “It would have been nice had he been there.

“He would have had a lot of questions and it would have taken up most of the meeting.”

Tony Woodley, general secretary of the Transport and General Workers Union, said: “MG Rover’s debts clearly outweigh its assets and that is very difficult for creditors.

“However the best way for creditors to gain anything is for the company to eventually get back into business.

“While there remains any opportunity for that to happen, the union will do all it can.”

Julie Kirkbride, Conservative MP for Bromsgrove, said: “It is tragic that a once great British company has been reduced to this.

“Now that we have a clearer picture of the books, the management over the past four years, stands even more in the dock.

“It is very surprising that the company could have been kept going for so long when it was obviously in such dire financial straights.”

Ms Kirkbride said there were “great many issues” for the government’s inquiry into the crisis to now consider.