Administrators of bankrupt British carmaker MG Rover may not be able to accept an extension to a British government loan this weekend assuming one is offered, a source said.
The carmaker filed for bankruptcy on Friday, and the Labour government subsequently lent it £6.5 million ($12.3 million) to cover its operating losses for a week while the company tried to resurrect rescue talks with Chinese investors.
Extending the loan for another week would delay politically embarrassing layoffs at MG Rover's 6,000 workforce just three weeks before a general election.
However, administrators must determine the company has a future before they can accept the money. "The company has to have some sort of prospect. . . . At this point it's difficult to see how that can be the case," the source said. "Administrators can't take gift aid."
The British government has set aside £25 million in addition to the initial £6.5 million loan, the Timesnewspaper reported today.
But if the company has no immediate prospects administrators PricewaterhouseCoopers could not accept the extension which would deplete the company's assets and harm existing creditors, the source said.
"There's no point just spending money -- the company doesn't have a lot of assets." MG Rover creditors include suppliers, a pension fund and Germany's BMW.