Cash-strapped builder Parkview Group has until March 17 to avoid a potential default on a US$940 million (HK$7.33 billion) loan tied to a landmark mall complex in Beijing, according to people familiar with the matter.

Parkview’s interest reserve account — funds set aside to service charges on the loan — is about 20 million yuan (HK$21.48 million) short of the amount required to be maintained at all times, the people said, who asked not to be named discussing private matters. The borrower on March 6 had used the funds to partially settle the facility’s quarterly interest payment of roughly 55 million yuan, the people added.

According to the loan’s terms, Parkview is required to maintain at least the same level of reserve funds in the account, the people said. If the amount drops below around 55 million yuan, as it did after the March 6 payment, the company has 10 days to top it up, or an event of default will be triggered, the people added.

A spokesperson for Parkview Group declined to comment.

Parkview’s reserve account balance has been dwindling as the company continues to grapple with its cash flows. The loan is secured by an iconic commercial complex in Beijing called Parkview Green, locally known as Fang Cao Di. But rental income generated from the building, which is suffering from low occupancy rates, hasn’t been enough to cover interest payments.

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A man walks inside the Parkview Green shopping center on the eve of the Chinese Lunar New Year, in Beijing, China, February 7, 2016. According to local media, traffic in Beijing has seen a rare relief from its usual heavy pressure after 15 million people have left the city, heading for family reunions in their hometowns on the eve of the Chinese Lunar New Year of Monkey. REUTERS

Hong Kong builder Parkview has a week to avert loan default