(Corrects figure in second paragraph to $983 million from $983 billion)

* Nithia Capital proposes $65 mln in cash, bonds and loans-source

* Ng Xinwei, CEO of Agritrade Resources, says talks are ongoing

SINGAPORE, July 21 (Reuters) - London-based Nithia Capital Resources Advisors LLP is seeking to acquire troubled Singapore commodity trader Agritrade International Pte Ltd (AIPL) and its shares in its Hong Kong-listed subsidiary, according to a source familiar with the matter.

AIPL, whose businesses span palm oil and coal, is undergoing a court-appointed restructuring after it collapsed earlier this year amid fraud allegations. It owes $1.55 billion, including $983 million to at least 20 banks.

Nithia Capital, an alternative investment manager that specialises in turning around underperforming companies, has proposed the creation of a Special Purpose Vehicle (SPV) to invest in AIPL, according to the source, who declined to be named because the matter is confidential.

A SPV ringfences the financial risk from buying assets because it is a separate company to its parent group. Agritrade's collapse is among a number of failures to hit the opaque world of commodities trading in Singapore, which is dominated by privately held firms.

Ng Xinwei, the chief executive of Agritrade Resources, the Hong Kong-listed subsidiary, told Reuters in an email that "negotiations are still ongoing in respect of the proposed deals" and declined to comment further.

Nithia Capital did not respond to a request for comment. AIPL's court-appointed supervisor EY declined to comment. Agritrade Resources' supervisors and law firm did not respond to a request for comment.

The vehicle, comprising a consortium of investors, would invest $65 million to acquire the entire share capital of AIPL, including its stake of about 55.7% in Agritrade Resources Ltd , according to the source.

Up to $35 million in cash, or cash and convertible debentures in Agritrade Resources, would be allocated towards debt repayment, the source said. The rest would be loaned to Agritrade Resources to release security held over a power plant in India, repay debts and as working capital, the source added.

Nithia Capital's conditions include that Ng, whose father founded AIPL, remain as director of Agritrade Resources to manage the company, which would in turn require him to work out arrangements with creditors to avoid bankruptcy, the source said.

AIPL creditors Commerzbank and Natixis have filed bankruptcy orders against Ng. Under Singapore law, a person cannot be a company director while they are declared bankrupt. They can be reappointed as a director once they have been discharged from bankruptcy.

Natixis and Commerzbank declined to comment.

AIPL's creditors have accused the company, Ng and his father, Say Peck Ng, of fraud. They allege that they were duped into lending AIPL money because duplicate documents were used to obtain financing from multiple banks for the same shipments.

Ng has previously said that he managed the day-to-day business of the company's Hong Kong-listed unit and his father was in charge of AIPL's trading business. He has said he supported efforts to fully uncover the extent, if any, of the alleged fraud and recover money owed.

The elder Ng's employment was terminated on Feb. 1. He has not commented publicly on the allegations and Reuters was unable to reach him for comment. (Reporting by Roslan Khasawneh; Additional reporting by Anshuman Daga; Editing by Florence Tan, Richard Pullin and Carmel Crimmins)