The company has been in frantic negotiations for refinancing as its poor performance drove it to breach the debt-to-EBITDA ratios stipulated in its lending package.

Quebecor World's board of directors today (21 January) unanimously agreed for the company to file for bankruptcy protection and said it had entered into a financial arrangement with Credit Suisse and Morgan Stanley for £500m ($1bn) to continue operating as a going concern.

The arrangement is subject to approval from the Canadian and US courts in which it is filing for protection.

Quebecor World president and chief executive Jacques Mallette said: "Today's filing is the result of industry pressures, particularly in Europe, combined with the inability of the company to raise new capital in the current market environment and the inability to complete the sale of its European operations.

"The steps we initiate today will allow the company to make changes that are necessary to ensure the long-term viability of the company within a process that ensures fair and equitable treatment for all stakeholders."

When a company files for creditor protection in the US and Canada, it is often able to raise large amounts of money in the form of Debtor In Possession financing (DIP). With DIP, a new lender is able to take a preferred security position over all the assets. This would enable the company to continue trading during the Chapter 11 proceedings while it tries to restructure either its operations, its financing or both.

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