Compensation 'unlikely' for TransTec suppliers

Suppliers owed money by TransTec, the Midlands engineering firm set up by Geoffrey Robinson, have been told that they are unlikely to get any compensation.

The news, given to unsecured creditors by the receivers Arthur Andersen at the end of last week, will be a further blow to car-component suppliers in the region, also hit hard by the dramatic scaling down of Rover operations.

TransTec, which was chaired until May 1997 by Mr Robinson, the former Paymaster General, was placed in receivership at the end of last year, following poor trading and the discovery of an undeclared multi-million pound claim against the company by Ford.

A meeting on Friday with firms owed around £100m by the automotive division, the biggest arm of TransTec, was told that it is highly unlikely that any money will be paid to them. Banks, which are are owed an additional £90m, are likely to be at least partly compensated. The meeting was also told that it is proving extremely difficult to sell the automotive business. Arthur Andersen said the crisis at Rover, which is a major TransTec customer, had made prospects for the sale worse.

Paul Harris, a Midlands solicitor who represents several of the creditors, said it was becoming clear that TransTec owed about double the original estimate of £190m.

On Thursday, suppliers to the controls division, which was sold for £2m, were told by Arthur Andersen that they would not get any of the £70m due to them, as not enough money had been recovered from the division.

Mr Harris said the lack of compensation would lead to a series of bankruptcies and the loss of thousands of jobs in the Midlands, on top of job losses stemming from Rover, which is being sold by BMW to Alchemy Partners, the private equity group.