A liquidation petition has been filed by creditors of H share Northeast Electrical and Transmission & Transformation Machinery Manufacturing, according to the High Court. Creditors have asked that the company be wound up in what could be the first liquidation of an H share since their inauguration in 1993. The lawsuit, according to the High Court, was filed yesterday by a creditor consortium led by CICC Finance after the company failed to resolve repayment arrangements with its creditors of more than US$43.1 million in debts. The creditors threatened to file for the company's liquidation last month if it could not meet the repayment deadline on December 6. However, as a mainland incorporated entity, any liquidation is likely to be handled in China, where employees get paid before creditors. The bankruptcy could also be complicated by the fact the largest shareholder is a state-owned enterprise. Northeast Electrical officials could not be reached for comment yesterday. The company earlier claimed the loan was misused by a now bankrupt trust firm, Liaoning Trust and Investment. The loan, which matured in May this year, was granted in 1998 for production facilities investment and acquisition of other firms. The state-owned maker of power generation equipment has seen its financial health deteriorate for more than 2.5 years. It made a combined loss of 638.74 million yuan (about HK$598.49 million) in the 2.5 years to June 30. The company has issued a profit warning for this year, saying it would record a loss despite measures taken for a turnaround. It blamed falling product prices and fierce competition for the expected loss. The company's share price fell 5.43 per cent to close at 43.5 HK cents on news of the court action. The price represented a 62.82 per cent discount to the per-share net asset value of HK$1.17. Northeast Electrical said in its profit warning that it intended to lay off 3,000 staff by the end of the year and cut staff further next year, in a move to keep afloat.