MG Rover’s efforts to secure a £100m bridging loan from the Government to back a Chinese rescue deal have stalled after it failed to convince either side it could survive.

Rover’s financial position was worse than either the Government or Shanghai Automotive Industry Corp had realised, according to Government insiders. They said the onus was now on Rover’s directors to address the Chinese carmaker’s questions about its finances.

Department of Trade and Industry officials are in China trying to broker a deal with SAIC and Phoenix Venture Holdings, MG Rover’s parent company. PVH directors are being pressed to make loans of several millions of pounds to the company from their own pockets.

SAIC is understood to be concerned to ensure that MG Rover is solvent when it signs the deal and that it will remain so for at least two years, by which time it is hoped the joint venture will be making money. SAIC does not want to be faced with considerable pension liabilities should MG Rover become insolvent after a deal has been signed.