Huachen, owned by the government of Liaoning province, said it was uncertain if it would be able to enter restructuring, in a statement on the website of interbank bond market clearing house China Central Depository & Clearing Co.

The company said that if the court was unable to approve a restructuring plan, or if the approved plan could not be executed, the court would terminate the restructuring process and declare the company bankrupt.

Huachen defaulted on a 1-billion-yuan ($151.88 million) bond last month, joining a growing number of delinquent state firms in a development that hit investor confidence and roiled China's credit bond market.

Huachen faces the prospect of restructuring after Gezhi Automobile Technology Co filed an application to the Shenyang Intermediate People's Court for restructuring of Huachen, Hong Kong-listed Brilliance Auto said in an exchange filing on Sunday. It remains uncertain whether the restructuring application will be accepted by the court, it said.

The latest clutch of defaults, which Goldman Sachs noted are bigger and include more state-owned enterprises than last year, highlights that close attention is needed to avoid being caught in the credit cleanup.

Bondholders see a bankruptcy restructuring by Huachen to be unfavourable as they will likely end up getting little out of the process.

Huachen's bankruptcy would have little impact on the operation of Brilliance but could upset plans for an expected privatisation, Daiwa Capital Markets said in a note to clients.

Reuters reported in September that Chinese state-backed investors are considering taking Brilliance private, citing people familiar with the matter.

($1 = 6.5842 Chinese yuan renminbi)

(Reporting by Samuel Shen, Andrew Galbraith, Yilei Sun and Brenda Goh; Editing by Stephen Coates and Louise Heavens)