Eurotunnel has sought French court protection as it tries to reach a debt restructuring deal with creditors.The Channel Tunnel operator, which owes £6bn, has said it needs to reach a deal or it will run out of cash by January.

It has warned creditors that it will be declared insolvent if it cannot reach a new debt deal by midnight on Wednesday.

It is seeking the French equivalent of US “Chapter 11″ bankruptcy protection, which gives firms time to rearrange their finances while still operating.

If approved by a court, the “Procedure de Sauvegarde” would give an insolvent Eurotunnel a six-month window of protection from creditors while a court-appointed administrator attempted to restructure the company’s debts.

The company agreed a preliminary restructuring plan with its priority lenders and Goldman Sachs, Barclays, Axa and Macquarie back in May.

Deadline approaching

It would see Eurotunnel’s debt cut by more than 50% to £2.9bn.

They have given Eurotunnel a waiver to allow it to have talks with a group of bondholders who have rejected the deal - but it runs out at midnight on Wednesday.

The bondholders are the lowest-ranked debt holders, who would be very unlikely to get any of their money back if Eurotunnel is declared insolvent.

They have complained that they are being offered too little money to allow the restructuring to go ahead, and are seeking a different deal which would leave them with cash and shares in the company.

Eurotunnel said it would withdraw its court protection application if the talks with bondholder groups in Paris were successful.

Even if a deal is struck with bondholders, the preliminary restructuring agreement has to be put to Eurotunnel shareholders at an extraordinary general meeting on 27 July.

Some of them have voiced their opposition to the deal.

The crisis at Eurotunnel has its origins in the construction of the channel tunnel, completed in 1994.

The tunnel cost about 14bn euros ($17.7bn; £9.8bn) to build, but traffic has never been nearly as heavy as was originally forecast, hurting Eurotunnel’s revenues.

Last month it announced that the 100 millionth passenger had passed through the Channel Tunnel.