French firm in horsemeat scandal seeks bankruptcy protection

Spanghero filed protection from creditors on Wednesday as the French firm at the heart of the horsemeat scandal rocking Europe sought time to recover from a collapse in sales.

The firm based in the southern town of Castelnaudary filed an outline survival plan with a commercial court in the nearby city of Carcassone.

The move will allow the company's management up to six months in which to negotiate with creditors under judicial supervision without the immediate threat of bankruptcy hanging over their heads.

"The clients are returning and the volumes are slowly increasing," the company said in a statement, adding that it hoped to eventually recover and avert bankruptcy.

The company last week stopped the wholesale trade of frozen meat after the agriculture ministry upheld a ban on it stocking frozen meat following a probe.

The ban means Spanghero cannot act as middleman between abattoirs and food-processing companies, the situation which allegedly allowed it to change labels on horsemeat and sell it on as beef.

Spanghero sparked a continental food alert by allegedly passing off 750 tonnes of horsemeat as beef, and had its sanitary licence suspended.

It was then allowed to resume production of minced meat, sausages and ready-to-eat meals following protests from 300-odd workers who said they were being unfairly penalised and were not in the loop about any fraud.

Spanghero's commercial director Christophe Giry said its meat processing activities were currently 20 percent of the normal level, while the production of ready-made meals were running at half the normal volume.

"We are waiting in the coming days to hear from old clients for four large contracts, which would really help us to recover," he said.

A recent study showed that sales of frozen prepared dishes containing beef plummeted by 45 percent in France in the week following the horsemeat scandal.

Products have been pulled from the shelves in more than a dozen European countries after horsemeat was detected in frozen dishes marked as containing beef.