Daewoo is denying reports that the company is bankrupt and has gone into receivership, claiming instead that a restructuring process essential to make it attractive to a potential buyer is going ahead.

Reports from Korea this morning said that Daewoo Motor had gone into receivership when its creditors refused to pump any more money into the ailing Asian car maker after unions refused to accept job and wage cuts among the domestic work force.

However, a spokesman for Daewoo UK said: “We are not bankrupt or gone into receivership." He claimed the UK media had wrongly interpreted the Korean legal process.

“The South Korean government is giving Daewoo legal protection from its creditors to allow the restructuring plan to continue. The company's debts have been frozen giving it the legal right to implement the restructuring plan regardless of union opposition.

“Despite this the unions have said they will stop vehicle production.”

For Daewoo's 129 UK showrooms and 56 Halfords' support centres, the spokesman said, it is therefore “business as usual”.

“Daewoo Cars is a self-sufficient subsidiary of Daewoo Motor that does not rely on funds from Korea” he said. “Therefore as long as the cars keep getting made, it's business as usual.”

Warranties and service packages will also be honoured.

In terms of the ongoing purchase negotiations with GM and Fiat, Daewoo UK says the restructuring process “will make Daewoo Motor an even more attractive buy”.

However, the further details of these negotiations are not expected for “at least a month”.

Daewoo's technical centre in Worthing, West Sussex, is funded directly from Korea. Future ownership depends on whether the company is bought by the GM/ Fiat partnership and what it then decides to do with it.