Pendragon and its bankers are looking for ways to slash its £287 million debts.

A report by the Dail Mail suggests that its lenders, including Royal Bank of Scotland, Barclays and Lloyds TSB, are working on a scheme to liquidate some of Pendragon's worst performing businesses.

The newspaper said they are keen to avoid a debt-for-equity swap which would need to be agreed by Pendragon's carmaker partners.

However chief executive Trevor Finn has said Pendragon is not in any difficulty paying back its borrowings.