Global IT and management consultancy Bearingpoint has filed for Chapter 11 bankruptcy protection in the US.

Bearingpoint, formerly known as KPMG Consulting, has outstanding debts totalling $2.23 billion – more than the company’s assets. Reports suggest that its creditors were expecting repayment to start in April.

Chapter 11 protection allows a company to conduct a financial reorganisation. Bearingpoint’s reorganisation will, according to CEO Ed Harbach, “significantly improve our financial profile and further enhance our ability to compete in the marketplace”.

But in the process of cancelling $1 billion of the company’s debt, the reorganisation will also cancel the value of all the company’s common stock. Around $700 million worth of debt will be repayed in the form of preferred stock.

Rumours have already surfaced that Accenture is in line to buy Bearingpoint’s Asia division.