The liability emerged as questions were raised over the fate of the dowry of more than £400 million paid to the company by BMW when it sold the company to the Phoenix Consortium in 2000. Nick Matthews, principal fellow of manufacturing at Warwick University, said it was not clear what had happened to all the money and called for a thorough government investigation.

Twenty-five suppliers have told the Birmingham Chambers of Commerce (BCC) that MG Rover owes them £9 million, while its engine operation owes them £400,000.

MG Rover has hundreds of suppliers, many of which are planning job cuts in the wake of the carmaker’s collapse into administration. Production at Rover’s Longbridge plant ceased last week after some suppliers refused to deliver components until they had been paid.

Suppliers will meet tonight to discuss “serious and immediate cashflow problems” and redundancies. The Government has set up a £40 million fund to help suppliers to pay wage bills and restructure for other work. But the suppliers are also expected to call for temporary exemptions from VAT and PAYE. MG Rover has had a VAT holiday since November.

Meanwhile, MG Rover workers were told yesterday that they could be liable to pay thousands of pounds in loans they took out to lease cars from the company.

Administrators have warned thousands of employees that if their cars are sold they may be liable to pay the difference between the sales proceeds and the outstanding loan. Previously, an MG Rover lease scheme allowed them to borrow money for a car, which could then be traded in for a new car after a year or 10,000 miles. The company would make up the difference between the value of the old car and the loan.

It also emerged yesterday that John Edwards, one of the founding directors of Phoenix Venture Holdings, MG Rover’s parent, is selling some Rover cars for nearly half price at a dealership.

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