Eurotunnel has received a boost in its last-ditch efforts to stave off liquidation after Deutsche Bank, one of the harshest critics of its restructuring proposals, backed a management plan. Deutsche had supported a group of debt holders in Eurotunnel, known as Arco, until last week's U-turn.

The German group had reportedly threatened to drive the Channel train company into liquidation as the best way to protect its interests. Sources close to Eurotunnel said Deutsche had changed its mind and decided to support management after the latest debt restructuring offered it better terms. A spokesman for Eurotunnel confirmed Deutsche had changed tack. He said: "They've made a total flip in their views. They appreciate we've tried to do our best to ensure that no one is unfairly squeezed. "We have warned all parties that if we go into liquidation, the French courts have valued the company at €890m ($1.1bn), which means no one will get anything." Eurotunnel's latest proposal involves a tender offer for its shares and the issuance of 13% of the equity of a newly formed company. It would also cut its debt by more than half, signing a new £2.8bn (€4.2bn) loan with a bank consortium and issuing £1.3bn of hybrid debt. The Arco bondholders had called for a reduction of Eurotunnel's debt by 60% to €3.7bn, with shareholders retaining at least 16% of the company. An Arco spokeswoman declined to comment. Nevertheless, Eurotunnel faces a big hurdle to avoid liquidation after one of its creditors, Oaktree Capital Management, a US bond and hedge fund manager, last week criticised the latest proposal. It said the deal was far inferior for creditors than a plan by Goldman Sachs and Macquarie to write off 54% of Eurotunnel's debt. It said: "It is not realistic to ask tier-three creditors to make this extra effort, nor is it balanced to ask them to reduce their rights without the same being asked of the other partners."