Rover suppliers 'in real and immediate crisis'

Suppliers of stricken MG Rover will meet later today to discuss “serious and immediate cash flow problems”.

Suppliers of stricken MG Rover will meet later today to discuss “serious and immediate cash flow problems”.

The total debt for suppliers of MG Rover could run into tens of millions of pounds, revealed Birmingham Chamber of Commerce and Industry (BCCI).

It made the estimation after 25 suppliers told them the car maker owed them a total of £9m (€13.2m).

MG Rover’s engine-making Powertrain division owed the same companies £400,000 (€587,000) so far.

BCCI chief executive Sue Battle said the situation posed a “very real and immediate crisis” for suppliers but stressed again that the British government banks could help through initiatives such as VAT and PAYE “holidays”.

Ms Battle added: “There is a difficult situation emerging with supplier stock held at the Longbridge plant.

“There is no clear picture about what stock is paid for and who owns it. This needs clarification by the administrator so that suppliers can recover their property or at least know the extent of the bad debt.

“It is the supplier who has to prove they own the stock by going into the plant and labelling their goods. Faced with various degrees of co-operation from Rover workers who are themselves threatened with redundancy, this just isn’t working.”

Meanwhile, workers fighting to keep their jobs at the stricken motor giant face the threat of having to pay thousands of pounds for cars they have leased from the company.

Employees at the Longbridge factory in Birmingham were told they may be liable for loans taken out to buy new MG Rover cars.

Some voiced fears that any redundancy pay they will receive if the plant closes will be wiped out if they have to pay off loans taken out to buy new cars.

Julie Kirkbride, who is standing for re-election as Conservative MP for Bromsgrove, said last night she knew of some workers who had five MG Rover cars in their family bought under a special employee scheme.

“It was bad enough that workers face losing their job but this is another bitter blow,” she said.

She blamed directors of the firm’s owners, Phoenix Venture Holdings, for “pushing” cars at workers in order to boost sales without warning them of the consequences if the company went insolvent.

The Transport and General Workers Union said it was studying agreements on car sales that its members had signed.

“Uncertainty over the status of cars leased by employees through the company is making this situation even more intolerable for Rover workers and their families,” said one official.

“Our members are not only worried about losing their jobs, but whether they will end up owing thousands of pounds for their cars.”

Steven Pearson, joint administrator at PricewaterhouseCoopers, said a special helpline had been set up to address employees’ concerns.

“We are currently having on-going discussions with the various providers of finance who have confirmed their intentions to work constructively with us, and that they presently have no intention of commencing any debt recovery action against the employees.

“Employees are also understandably concerned about the insurance position, and we are currently exploring how fully comprehensive cover can be provided on all employee scheme cars.”

Workers who suffered any loss or damage to their car were asked to contact the administrators.

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