Dermot Desmond and other investors in a €3bn oil refinery planned for Canada are looking to raise new investment after a contractor moved to have the company declared bankrupt.

Desmond owns 21% of Newfoundland and Labrador Refining Company (NLRC) which is planning to build a plant off Newfoundland which would refine crude oil from the Middle East into petrol, jet fuel and diesel for Europe and North America.

Last week SNC-Lavalin Group, which provides engineering and technical services to the company, went to Newfoundland's Supreme Court to have the company declared bankrupt. NLRC said on Friday it is seeking court protection from creditors which will provide NLRC with a stay of proceedings "while it formulates a proposal for restructuring".

The company said in a release that it has filed a notice of its intention to seek court protection under the Bankruptcy and Insolvency Act. The company wants to keep creditors at bay while it comes up with a restructuring proposal.

"With the exception of its dispute with SNC Lavalin, NLRC has been in productive discussions with its creditors to resolve and restructure its debt arising from the challenges in sourcing financing due to the deterioration of North American finance markets earlier this year," the company said. "NLRC remains encouraged by the economic fundamentals of the proposed project and continues to pursue several potential alternatives to attract financing and/or partners."

NLRC said last week it was looking to raise finance from Middle Eastern and Indian investors for the multibillion-dollar complex it is planning at Placentia Bay off Newfoundland in Canada.