HOPES of saving 1,100 North-East jobs were dealt a major blow last night when it emerged that the Hibernia Foods group could be broken up.

Frantic negotiations were still going on to find a buyer for the entire group amid fears workers could end up on the dole before Christmas.

The Dublin-based company manufactures bakery products under licence to US conglomerate Sara Lee.

It also makes chilled desserts under licence to Entenmanns, as well as Mr Brains meat faggots and its own label products for a number of major supermarkets.

It employs 693 at two own-label product plants in Hartlepool, 400 at another own-label site in Stockton, 550 making Sara Lee and Entenmanns products in Bridlington, 250 people at a chilled dessert factory in Birmingham and 200 at a Mr Brains plant in Bristol.

Until now it had been assumed that the group -which went in administration earlier this month - would be sold as a whole going concern.

However, it has now emerged that the company's Sara Lee factory, in Bridlington, may be sold separately.

Workers fear that without the prestigious Sara Lee brand, receivers may be unable to find a buyer for the rest of the group - leading to the break-up of the company and job losses.

Last night, Hartlepool MP Peter Mandelson, who has been closely involved in the negotiations, admitted there were difficulties.

He said: "After a difficult day of discussions between the various parties, extra talks are now scheduled to take place over the weekend.

"I will continue talking to everyone involved but there will be no clear decision either way until Monday."

Workers have consistently been told a deal with a prospective buyer was imminent since it went into receivership in October.

But now it has emerged that it is unlikely the prestigious licence to make Sara Lee cakes will passed on to the new buyer. Instead, Sara Lee is in talks with another company.

Unions have requested an urgent meeting with Sara Lee bosses and Mr Mandelson has also sent two letters to the company.

Alan Milne, regional officer of the Bakers, Food and Allied Workers Union said that without the franchise hundreds of jobs could be lost.

In a statement, the union said: "The Bakers Food and Allied Workers Union together with the Transport and General Workers Union have requested a meeting with Steve McMillan, chief executive officer of the Sara Lee Corporation, to discuss the reason why they are not prepared to grant a new licence to a prospective purchaser of Hibernia Foods."

The union said this could result in "2,000 loyal employees across Britain" ending up on the dole queue before Christmas.

Rayner Peett, spokesman for receivers KMPG, declined to name the prospective buyers involved, but admitted there were problems. He insisted there was still reason for hope and said talks were continuing with more than one prospective buyer.

He said: "We are concerned at the current situation. However, we are still talking to potential buyers and continuing to communicate with Hibernia employees."

Mike Knowles, president of Sara Lee's worldwide frozen bakery operations, said: "We are disappointed that the we were unable to reach an agreement with one potential supplier who expressed an interest in Hibernia's Bridlington plant.

"Nevertheless, we are now in discussions with a different, UK-based company, who have expressed an interest in buying the Bridlington plant and establish a supply agreement with Sara Lee.

"Both parties know that the plant produces high-quality products and has a skilled, professional workforce."

Hibernia is believed to have gone into receivership after running up debts including one of £17.5m.

However, orders have continued to flood into the factories in the run up to Christmas.