* Huishan announces move to provisional liquidation
* One of the most spectacular collapses of a HK-listed firm
* Fate of restructuring plan not addressed (Recasts and writes through with details)
SHANGHAI/BEIJING, Nov 17 (Reuters) - China Huishan Dairy Holdings Co Ltd is preparing for provisional liquidation in a legal escalation of one of the most spectacular collapses by a one-time darling of the Hong Kong market.
Shares in the mainland group have been suspended since they plunged 85 percent without warning in March, after which it revealed missed loan payments and the disappearance of its finance director.
The announcement late on Thursday that it has instructed lawyers to prepare for provisional liquidation is seen as a sign that Huishan's creditors are seeking a more active role in the multi-jurisdictional battle over the fate of the group.
Huishan's debts totalled at least 38 billion yuan ($5.73 billion) at the end of July, according to a work-out plan seen by Reuters.
Earlier this month it said it had come to an agreement with most of its mainland creditors. The biggest of these include Bank of China Ltd , which has submitted claims for 4.36 billion yuan, along with China Minsheng Banking Corp Ltd and Industrial and Commercial Bank of China Ltd .
Creditors of its Hong Kong-listed unit include a consortium of banks led by HSBC Holdings PLC, China CITIC Bank International Ltd and Hang Seng Bank Ltd, which extended a syndicated loan to the listed vehicle.
The announcement provided no indication as to whether the restructuring plan announced earlier this month would move forward, or whether offshore creditors would cooperate with those efforts.
The situation is being monitored closely by Huishan creditors, especially unsecured creditors that stand to lose the most in a court-ordered sale of company assets.
Deloitte, which earlier was hired by Huishan as an independent forensic accountant, is the leading candidate to act as provisional liquidator, people familiar with the matter told Reuters, declining to be identified due to the sensitivity of the matter. Deloitte was not immediately available to comment.
Further complicating the situation is a move by Ping An Bank Co Ltd, which claims it is owed 2.4 billion yuan, to institute a separate provisional liquidation of Champ Harvest Ltd, the main vehicle of Huishan's chairman and majority shareholder, Yang Kai.
Champ Harvest is registered in the British Virgin Islands, while the listed unit of Huishan is domiciled in the Cayman Islands where the company is preparing for provisional liquidation.
Ping An Bank did not respond to a request for comment.
Deloitte, in its forensic analysis, estimated that Huishan's total assets at the end of June amounted to 25.9 billion yuan. Most of those assets, Huishan said in its Thursday filing, are held through subsidiaries based in mainland China.
"Any debt restructuring of those assets and liabilities would be subject to PRC law," Huishan said, referring to the People's Republic of China.
Bankers said the latest move could be a headache for offshore creditors.
"You can't rule out that this provisional liquidation is a way of forcing some opposing creditors to accept its debt restructuring plans," said Meng Shen, director of Chanson & Co, a boutique investment bank based in Beijing.
Huishan was billed as the country's biggest integrated dairy firm when it went public in 2013. It raised additional funds after listing by leasing its cows and selling wealth management products through what it called "innovative financing".
Huishan gave little indication of its financial health in Thursday's filing, only that its subsidiaries in China likely had around 10.5 billion yuan in combined net liabilities as of the end of March, without giving further details. ($1 = 6.6332 Chinese yuan renminbi)
(Reporting by Adam Jourdan in SHANGHAI and Matthew Miller in BEIJIJNG; Additional reporting by Twinnie Siu and Umesh Desai; Editing by Jennifer Hughes and Christopher Cushing)