Eurotunnel handed six-month bankruptcy immunity


Troubled Channel tunnel operator Eurotunnel has been given a six-month reprieve after a French court granted its request for protection from its creditors, who had threatened to force the company to declare itself bankrupt.

The Anglo-French company appealed to the courts after the firm was unable to reach a deal to reduce its £6.2 billion worth of debt.

Eurotunnel has been saddled with the mountainous debt levels after struggling to repay the cost of building the Channel tunnel due to lower than expected levels of traffic.

The company's chief executive and chairman, Jacques Gounon, said that following today's "positive" court ruling, the firm now has a realistic chance of rescuing itself from insolvency.

I am convinced that we now have the conditions necessary to achieve a financial restructuring for Eurotunnel within the time allowed," he said.

Mr Gounon had warned last month that Eurotunnel would be insolvent by January if an agreement on restructuring the company were not reached by September this year.

The group applied for legal protection from its creditors after a minority group of its lenders, led by Deutsche Bank, rejected a restructuring deal proposed by the company.

The tribunal of commerce had been due to rule on Eurotunnel's request last week, but delayed its decision to allow more time for talks on a possible agreement.

A spokeswoman for Eurotunnel confirmed this morning that the company had met with its leading bondholders, including Deutsche Bank, ahead of the court's ruling.

She stressed that the meeting was aimed at "taking stock" of current negotiations between the company and its creditors and would guarantee the emergence of a debt restructuring deal between the various parties at the 11th hour.

Today's decision has similarities with chapter 11 bankruptcy rules in the US, but until now has not been applied to a large company under French law.

Under the procedures, Eurotunnel is permitted to continue operating while it addresses its financial deficit.

The company has been given an initial period of six months to draw up a debt recovery plan with the support of administrators appointed by the French court. During the period the company is not required to pay any interest on its debts.

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