Land Rover calls for insolvency reforms

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Land Rover will call on the Government for further reforms of the UK insolvency laws after it agreed to bail out one of its suppliers yesterday.

The car maker yesterday agreed to take on some of the debts of the insolvent engineering company UPF-Thompson, which is the sole supplier of the chassis for Land Rover's Discovery range, settling a legal dispute with UPF's administrators KPMG. This will allow UPF to trade until it seals a management buyout or sale. Grant Thornton will replace KPMG.

The deal will safeguard 1,400 jobs at Land Rover, which had threatened to suspend production of the Discovery for up to nine months while it found an alternative supplier. This in turn could have put 10,000 jobs at risk at other suppliers.

KPMG had warned UPF would stop supplies unless Land Rover first paid £45m for the contract. This prompted the car maker to seek a temporary injunction that forced UPF to continue supplying the chassis until the case came before the courts.

Land Rover and its US partner Ford are lobbying other car makers to support calls for a new system offering insolvent companies court-protection from creditors along the lines of Chapter 11 legislation in the US. It plans to approach the Goverment within the next fortnight.