Creditors spared costly Rover accounts restatement
Interests of Rover creditors put first as FRC review concludes it should not investigate further or encourage a restatement of accounts
The Financial Reporting Council has chosen not to force MG Rover to restate its accounts or probe further, because this would only have ‘eaten into the limited assets’ left to creditors.
Link: Consortium offers £65m for MG Rover
A review of the Rover accounts concluded that there were issues to be addressed. But FRC chief executive Paul Boyle said the regulator had resisted restating the accounts. ‘In the end this would have affected people already damaged by Rover,’ said Boyle.
Trade and industry secretary Alan Johnson announced a full external inquiry last week. The FRC is understood to have examined whether the company was trading while insolvent from January to its collapse in April.
Trading while insolvent is illegal, although a company is permitted to continue trading while there is a reasonable prospect of a recovery.
A report to creditors from administrator PwC shows Rover was losing £800,000 a day in the first three months of 2005. It also showed liabilities outstripped assets by the time of its collapse. It owed creditors £1.37bn, but had assets of just £80.6m.
The NAO is considering a review of the DTI’s use of public money to help Rover. The prime minister is understood to have offered £100m, against civil servants’ wishes, and a ‘rescue loan’ of £5.2m was granted three days after administrators went into Rover. An NAO spokesman said its review would look at ‘value for money’.