The company missed a payment deadline for 2 billion yuan ($285 million) worth of maturing short-term commercial paper on Dec. 1 and had until next Monday to make up the shortfall.

The state-owned company affiliated with a top Chinese university proposed using Hong Kong-listed shares of Bank of Chongqing as collateral at a meeting with bondholders in Beijing on Friday, the sources said.

The proposal has not yet been agreed upon, according to the sources.

Up to $2.95 billion of Peking Founder's offshore U.S. dollar debt could cross-default upon the onshore paper's failure, Japanese brokerage Nomura has warned.

Peking Founder holds about 3% of Bank of Chongqing's shares, according to the lender's third quarter report.

Reuters was not immediately able to reach Peking University Founder Group for comments.

($1 = 7.0085 yuan)

(Reporting by Xiaochong Zhang in Beijing and Andrew Galbraith in Shanghai; Writing by Noah Sin in Hong Kong; Editing by Tom Hogue and Muralikumar Anantharaman)