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Huishan Dairy has defaulted on a $200m loan and had assets frozen in China in relation to another $79m debt in a sign of the troubled dairy operator’s worsening problems.

The group’s shares have been suspended since they plunged 90 per cent with no warning late last month, shortly after which it confirmed it was late on loan payments, that its treasurer had gone missing and its chairman and controlling shareholder, Yang Kai, had pledged 71 per cent of the company’s shares as collateral for loans.

It is likely that the dumping of shares by one of those lenders was key to the March 24 share price plunge, which wiped $3.9bn off the company’s market capitalisation.

Late on Monday night, a brief filing to the Hong Kong Exchange said that a group of banks led by HSBC had declared Huishan to be in non-compliance on a $200m syndicated loan arranged in 2015, and that it was taking legal advice in relation to the issue. It said also that a Shanghai Court had agreed in principle to freeze assets worth $79m at the request of Gopher Asset Management, a wealth management product platform and another creditor.

The other banks that took on the loan in addition to HSBC are Bank of Shanghai Hong Kong, China Citic Bank International, China Merchants Bank, Chong Hing Bank and Hang Seng Bank.

Last month Huishan met with 23 creditors under the oversight of Liaoning officials – its home province. The officials told creditors not to sue the company and to maintain existing credit lines according to Caixin, a financial news magazine.

HSBC led work on Husihan’s initial public offering in 2013 after its mainland staff had identified the commercial banking customer as a candidate for a public float.

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