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UPDATE 2-Huishan Dairy debt woes deepen as HSBC demands repayment of $220 mln

* HSBC is the leading bank on a $200 mln loan

Demands cover separate $13.7 mln loan extended by HSBC

* Huishan shares have been halted since March

* Huishan says seeking legal advice, still in talks with creditors (Recasts and adds details on the loans)

By Elzio Barreto and Adam Jourdan

HONG KONG/SHANGHAI, Sept 12 (Reuters) - HSBC has demanded China Huishan Dairy Holdings Co Ltd repay $220 million in loans this week - a move set to make it even more difficult for the Chinese firm to extricate itself from a mountain of debt and find a white knight.

Billed as the nation's largest integrated dairy firm in a high-profile $1.3 billion IPO in 2013, Huishan has since become a cautionary tale about risky financing in corporate China.

Its stock plunged 85 percent in March before being suspended. Since then most of its directors have quit, it has missed loan payments and lost contact with a key executive in charge of its finances, and is also under investigation by Hong Kong's securities regulator.

Huishan said in a statement late on Monday it had received letters from HSBC, the leading bank on a $200 million loan, saying all loans and interest were immediately due because of "one or more events of default" under a 2015 loan facility agreement.

Repayment of the $200 million loan from HSBC and other lenders was due within three days from Sept. 11, Huishan said in the statement, citing a letter sent by HSBC. The demand for repayment follows a letter of warning about broken loan covenants in April.

Accrued interest added a further $6.4 million. HSBC also demanded immediate repayment of a $13.7 million loan it had extended in 2014.

Huishan said it continues to be in talks with its major bank creditors in China about debt restructuring and that it is seeking legal advice on HSBC's demands.

HSBC declined to comment when contacted by Reuters.

As of March this year, Huishan owed $3.9 billion to creditors including Industrial and Commercial Bank of China , Bank of China Ltd and HSBC. It has hired debt restructuring advisers and forensic accountants to investigate gaps in its financial statements.

Huishan said in July it was planning to carve up shares in the company among its creditor banks and existing shareholders as part of restructuring plans and was ultimately looking for a white knight to financially support the firm.

Huishan made headlines in 2016 when it sold and leased back part of its herd in what one executive called "innovative financing." But risks linked to its debt-fueled growth took center stage after a December report from U.S.-based short-seller Muddy Waters questioned its accounting and debt burden. ($1 = 7.8133 Hong Kong dollars) (Reporting by Elzio Barreto and Adam Jourdan; Additional reporting by Anusha Ravindranath in Bengaluru and Sumeet Chatterjee in Hong Kong; Editing by Edwina Gibbs)