Feb. 4 (Bloomberg) -- Railpower Technologies Corp., a manufacturer of locomotives that said it’s running out of cash to pay bills, won bankruptcy protection in Canada.

A Quebec Superior Court judge granted Railpower protection under the Companies’ Creditors Arrangement Act, the company said today in a statement. The protective order prevents creditors from suing or seizing assets. Railpower also said it will file under Chapter 15 of the U.S. Bankruptcy Code in the Western District of Pennsylvania.

The order “provides a framework for us to restructure our business,” Richard Laliberte, chief restructuring officer, said in a statement.

Railpower, based in Brossard, Quebec, said Jan. 28 it cut its workforce by 37 percent, to 84 from 134, to reduce costs. The company put itself up for sale and said today it’s in talks with third parties and the Ontario Teachers’ Pension Plan Board, the largest creditor, on strategic alternatives.

The bankruptcy filings won’t affect current day-to-day operations, the company said. Jose Mathieu, the president and chief executive officer, left the company, Railpower said.

The bankruptcy protection is scheduled to expire March 6 unless the judge agrees to extend it.

Railpower had a net loss of C$7.1 million ($5.8 million) in the third quarter, as sales slumped 91 percent to C$2.9 million from C$33.5 million a year earlier.

Railpower fell 4 Canadian cents, or 50 percent, to 4 cents at 3:37 p.m. in trading on the Toronto Stock Exchange.

Ernst & Young Inc. was appointed to monitor the restructuring process. McCarthy Tetrault LLP is Railpower’s legal counsel.

To contact the reporter on this story: Joe Schneider in Toronto at jschneider5@bloomberg.net.

Last Updated: February 4, 2009 15:49 EST