A U.S. judge Wednesday granted bankruptcy protection to Spain's Abengoa SA over the objections of a group insurance companies who claimed the energy company's talks to restructure billions in debt was unfair to U.S. creditors.

Judge Kevin Carey of the U.S. Bankruptcy Court said he would sign off on Abengoa's bid for protection under chapter 15, which recognizes the company's ongoing restructuring talks with its banks and bondholders in Spain.

Recognition of the Spanish proceeding locks in a pre-insolvency standstill agreement Abengoa struck with key creditors that gives it more time---through Oct. 28---to continue negotiations on restructuring its debts, which court papers show total more than €14.6 billion ($16.48 billion).

A group of insurance companies that has issued some $250 million in surety bonds tied to Abengoa's construction of U.S. power plants had balked at the U.S. court's recognition of the Spanish proceeding.

The companies—including Liberty Mutual Insurance Co., AIG and Zurich American Insurance Co.--called the Spanish proceeding "manifestly contrary" to U.S. public policy because it forced them to abide by a standstill agreement without due process.

Judge Carey said the lawyers for the insurers were arguing that the Spanish restructuring proceedings should only be recognized if they were identical to a U.S. bankruptcy proceeding.

"They don't have to be identical to a U.S. bankruptcy proceeding," he said in his ruling from the bench.

Under chapter 15, a company seeks a U.S. Bankruptcy Court's recognition of a foreign bankruptcy case---in this case the Spanish proceeding---as the main, or controlling, case.

With Judge Carey's approval, the Seville-based energy company will receive the benefits of U.S. bankruptcy law, including the so-called automatic stay that halts lawsuits and prevents creditors from seizing assets.

Jacqueline Palank contributed to this article.

Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com

(END) Dow Jones Newswires

April 27, 2016 15:25 ET (19:25 GMT)

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