Workers of bankrupt textiles group Gatic expect Buenos Aires' government to transfer some of the company's manufacturing facilities to them after it failed to attract bidders to an asset auction last Monday.

The process is part of the government's struggle to undertake what has been billed as one of Argentina's "biggest, most complex and politicised bankruptcies."

"We expect to meet the government next week. Nobody wants to buy the assets of a company which is about to be expropriated by the state," said Jorge Omar Torres,
president of workers' cooperative Cooperativa Unidos por el Calzado, which runs the San Martin factory at the centre of the negotiations. Nearby Pigue is also up for grabs.

Gatic, one of Argentina's biggest textile companies, was forced to declare bankruptcy on 14 September after 1,500 angry workers demanded payment of $1 million in
back wages.

The company has reported liabilities of $180 million, most of which are owed to pension fund Afip, the Nacion, Provincia and Ciudad banks, and its workers. At the time of the filing, Gatic had 11 plants employing 5,000 people.

Churning out a diverse range of thread, yarn, finished apparel and shoes, beleaguered Gatic suspended payments to suppliers, creditors and workers over two years, Torres said.

This summer, Argentine textiles mogul Gillermo Gotelli announced he would buy five idled factories, reinstating 2,700 jobs, but those negotiations reportedly collapsed soon afterward.

To preserve over 400 jobs at the San Martin and Pigue plants, Buenos Aires allowed workers to form cooperatives to operate the plants, which Torres said are now running at full capacity under a viability plan orchestrated by them.

San Martin produces 2,500 daily pairs of shoes and about 800 clothing wears (including pants, T-shirts other sports clothes), Torres said. He did not know output rates for Pigue, but said the plant is Gatic's biggest, supplying a variety of thread, yarn and finished apparel products.

Representatives from the Pigue workers' cooperative could not be reached for comment. Gatic owner Argentina's Bakchellian family, which workers have accused of fraud, also could not be contacted.

Despite next week's meeting, the Buenos Aires administration is likely to re-schedule another auction for Gatic's assets, but the price is expected to be significantly lower than Monday's $3 million starting bid.

Brazilian textile firms Dilly and Grendenne, which were understood to be interested in Gatic's assets, might then sweep in with offers.

Meanwhile, Buenos Aires is also studying whether to sell Gatic's 9 other manufacturing plants or allow workers to form cooperatives to run them, Torres noted. The cumbersome process is expected to continue well into next year.

By Ivan Castano.