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Last Updated: Friday, 7 October 2005, 11:37 GMT 12:37 UK
Rover workers share 14m payout
The Longbridge plant in Birmingham
Almost 6,000 jobs were lost at Longbridge
Thousands of former workers at collapsed car company MG Rover are to share a 14m payout after winning a fight to secure redundancy wages.

Workers had been waiting for eight-weeks worth of pay in lieu of redundancy notice, which they were legally entitled to.

The Transport and General Union (T&G) launched the employment tribunal case on behalf of about 5,000 workers.

"Workers and their families should not have been kept waiting," T&G said.

"This proves that workers must become priority creditors, and administrators should consult with unions before laying anyone off," said union official Adrian Ross.

Cash risk warning

Meanwhile controversy continues over the role of the administrators in the collapse of Rover exactly six months ago.

A report earlier in the FT said administrators of MG Rover refused to use the car giant's own funds to keep it going following its collapse earlier this year.

The government decided to keep it going with a 6.5m cash injection just a week before the May election in the hope of finding a buyer, the paper said.

We became very sceptical as to the potential to close the deal with SAIC and, if it could be done, how long it would take
Tony Lomas, PwC

However, PwC had told the government it was "highly unlikely" it could sell Rover on as a going concern.

The National Audit Office is currently looking into how the money was spent.

At the time of the Birmingham-based company's collapse, it only had 17.2m in cash.

When PwC, appointed as administrator, came in to clean up, it told unions and the government that it would have to make most of Rover's staff redundant straight away.

Weekend factor

By that time it was looking unlikely that Chinese company SAIC would come to the company's rescue and the potential saviour could not be contacted because Rover collapsed just before a weekend, the paper said.

"We became very sceptical as to the potential to close the deal with SAIC and, if it could be done, how long it would take," Tony Lomas of PwC told the FT.

"We thought it was highly unlikely and... were not prepared to venture any of the funds that were available."

The Department of Trade & Industry (DTI) decided to hand over 6.5m to stave off redundancies for a week in the hope that Chinese talks would be revived.

The money was technically a loan and the DTI expected it to be repaid once the business was sold.

And in the government's opinion the absence of direct contact with SAIC over the weekend did not rule out a rescue deal.

"It was certainly not clear that a deal was a non-starter," the DTI told the enquiry.

In the end, a rival Chinese carmaker to SAIC, Nanjing Automotive, secured ownership of MG Rover in July after a three-way bidding battle spread over three months.

Former Longbridge workers describe life after Rover

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