Ailing Spanish baker Panrico has filed for creditor protection to give itself some breathing space as it tries to restructure the business.

The filing gives Panrico protection for three months – with an option for an extra month – and can be revoked by the company at any time.

However, with Panrico trying to reshape itself to save the business, the protection would block any move to force the group into bankruptcy.

Panrico has run up accumulated losses of EUR700m in the last four years. Industry watchers believe Panrico has suffered as Spanish consumers, hit by the economic crisis in the country, have sought cheaper products. Own label has made inroads into the categories in which the Donettes and Qe! brand owner operates. Market experts also argue Panrico has not reacted quickly enough to these tougher trading conditions.

Last week, in a meeting with unions, Panrico put forward plans to cut 1,900 jobs and cut salary costs by a third. A fortnight ago, Panrico suspended the pay of over 4,000 staff. The proposals angered unions, which walked out of discussions. Formal negotiations have yet to restart.

Panrico said the filing for protection from creditors would give it “flexibility” to find a “real solution” for the company. It said negotiations could continue.

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The business is owned by private-equity firm Oaktree Capital Management. In 2010, Panrico’s creditors took control of the heavily-indebted group from previous private-equity owner Apax. Since then, Oaktree has increased its stake in the company in stages by buying up Panrico’s debt.