LONDON (AP) -- Troubled British van maker LDV on Wednesday laid off most of its employees and set a May 6 deadline to secure new funding or go into administration, a form of bankruptcy protection.
The company informed employees that they would not be paid after this week, and said only senior management would continue working. The company employed about 900 people, according to its Web site.
If LDV goes into administration, it would be the first vehicle manufacturer to fail in a recession which has seen U.K. vehicle production fall by half since a year ago.
LDV, based in Birmingham, has produced 39 vans in the first three months of this year, after turning out 9,308 last year, according to the Society of Motor Manufacturers and Traders.
The company has applied to the European Investment Bank for a loan but the bank will not support the company unless additional private funding is secured, LDV said.
"During the past few weeks, the global economic crisis has forced us to operate in exceptional conditions and we cannot continue in this position without funding indefinitely," CEO Evgeniy Vereshchagin said in a letter to employees.
"We must now inform you that the deterioration in the position of the business has forced the directors to apply for administration," he added.
"I must stress that this does not mean the business is in administration yet. Our application will be processed on 6 May and we still have until that time to secure funding for our plans."
Prime Minister Gordon Brown said the government was prepared to support LDV if it secured new investment.
"We have said there is a range of government support available if they have a business model for moving forward that we can work with and be able to support," Brown said in the House of Commons.
"Obviously the responsibility for putting the firm on a firmer footing has rested with the owner and potential investors, but we have already set aside money to make it possible for the car industry to receive support from government."
Administration is a form of bankruptcy protection. Administrators are appointed to salvage as much of the company as possible for the benefit of its creditors, a process which can involve trying to keep the business as a going concern or breaking it up and selling it off.
LDV, formerly Leyland DAF Vans, has been owned by Russia's Gaz Group, controlled by billionaire Oleg Deripaska, since 2006.
