(Bloomberg) -- A cash crunch at one of China’s best known conglomerates is getting worse as the company said it will not be able to pay its upcoming dollar notes.

China Minsheng Investment Group Corp.’s offshore unit said in a filing that it won’t will not be able to repay the principal, as well as the interest on the 3.8% $500 million bond due August, citing liquidity reasons. On the previous day, the property-to-financial conglomerate announced it only managed to repay part of the principal on a 6.5% 1.46 billion yuan onshore note.

The development underscores the liquidity crisis that has been pressuring the Shanghai-based company that aspired to become China’s answer to JPMorgan Chase & Co. It will be the first time that the firm’s dollar bond creditors will miss out on repayment.

CMIG in April said cross-default clauses were triggered on its dollar notes totaling $800 million. These include $300 million of debt that China Construction Bank Corp. repaid on the company’s behalf in June as the bank provided a standby letter of credit -- effectively a pledge to repay if the borrower can’t.

CMIG is the brainchild of Dong Wenbiao, the former chairman of China’s largest non-state bank who’s known as the “godfather” of the nation’s private sector. Dong convinced 59 private sector companies to join forces as the company’s founding shareholders. CMIG’s funding eventually dried up as its investments struggled and lenders pulled back because of tighter regulation.

To contact Bloomberg News staff for this story: Tongjian Dong in Shanghai at tdong28@bloomberg.net

To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net, Lianting Tu

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