POTENTIAL buyers are lining up to express interest in a debt-riddled frozen food company, The Northern Echo can reveal.

Staff at Hibernia Foods were rocked yesterday by the news that the firm had gone into receivership after creditors pulled the rug on the business.

The Dublin-based company, which employs 1,100 workers on Teesside, is believed to owe debts of £17.25m to a single company. It was taken over by receivers KPMG on Friday night.

KPMG last night confirmed it had already had calls from parties expressing an interest in buying the company which holds the European franchises for the Sara Lee, Entenmann and Mr Brain's frozen food names.

Rayner Peett, of KPMG Corporate Recovery, said: "We have had some calls but, of course, we would stress it is very early days. Obviously we cannot reveal names at this stage."

Reports that new owners could be found will bolster morale at the two plants in Hartlepool and another in Stockton.

In addition, workers have been told they would certainly be paid this week despite the firm going into receivership.

Hartlepool MP Peter Mandelson warned the company faced a difficult period.

He said: "I have now spoken to the company's receiver from KPMG and, looking at the numbers, it is clear that the going will be tough for Hibernia.

"The company has already tried to move its operations to the North-East, concentrating on the Hartlepool plants. But they have had problems with creditors and suppliers whose patience ran out. The whole food manufacturing sector is struggling and Hibernia is not alone in facing extreme difficulties.

"I have told the receiver that I will work closely with him in his efforts to salvage a going concern from the company but it is too early to say whether this is likely to be successful."

Alan Milne, regional officer of the Bakers, Food and Allied Workers Union, also confirmed that there was interest in buying the business.

He said: "Obviously that does not mean they are going to actually buy but it is good news. We have held meetings with our members and everybody is keen to know where these potential investors are going to come from."

A total of 400 people are employed at the Stockton site, 493 at Oaksway, Hartlepool and 200 at Hartlepool's Brenda Lane.