LONDON, Nov 7: The troubles of high-profile European companies such as Alstom and Cirio have triggered calls to introduce US-style Chapter 11 bankruptcy procedures, but some experts doubt their value.

Fitch ratings agency said on Thursday the French state bailout of the engineering company Alstom had underlined the need to reform French insolvency law, saying the US procedure was more effective in saving companies.

“Although not a panacea by any means, Chapter 11 nonetheless offers a model of corporate rehabilitation that French policymakers appreciate,” the rating agency said.

According to the French Ministry of Justice, French insolvency procedures rescue only 10 per cent of companies, while Fitch said 95 per cent

of companies emerged successfully from US Chapter 11 protection.

Chapter 11 helps save troubled companies by providing easy access to new financing and allowing managers to stay in control, according to the rating agency.

Stefano Aversa, Milan director at US-based turnaround consultant AlixPartners, said that authorities in Italy are looking to Chapter 11 as a procedure which allows a better trade-off between the recovery of the business and the repayment of creditors.

“Key will be leaving the debtor in charge, as under US Chapter 11,” says Aversa. “Often current management is best placed to achieve a turnaround.”

Cirio, the Italian food processing giant, has filed for insolvency under the Italian Extraordinary Administration procedure, which Aversa says is best suited to companies that will be split up in asset sales rather than going concerns.—Reuters