UPDATE 1-Cattles says bondholder, bank dispute goes to court

* Cattles takes main unit to court in technical move

* Dispute between banks, bondholders over repayment (Adds detail, comment from company)

By Lorraine Turner

LONDON, Aug 11 (Reuters) - Troubled sub-prime lender Cattles CTT.L will go to court to determine whether bondholders of Cattles Plc or bank lenders to its unit Welcome Finance have first call on its assets, the company said on Tuesday.

Cattles, which is saddled with 700 million pounds ($1.2 billion) of bad debts after accounting issues and poor impairment provisioning, is in talks with lenders to agree a formal standstill agreement after extending the maturity of the 500 million pound banking facilities until the end of the year. [ID:nLF129652]

The lender, whose shares are suspended, was hit by the credit crisis and its reliance on expensive wholesale funding. It closed its door to new customers in January in order to conserve cash.

Uncertainty around the repayment of loans and bonds has forced the company to seek clarity in the High Court, where technically Cattles is taking its subsidiary to court.

"This is a consensual legal process in which the court is being asked to resolve the previously described dispute between Cattles' banks and bondholders over debt repayments," a spokesman at Cattles said.

Bondholders are demanding immediate repayment of 400 million pounds of debt which had been due to mature in 2017. [ID:nLO375952]

Cattles said in July it would not make a bond interest payment. [ID:nL683469]

The group said on Monday it had sold its unit Cattles Invoice Financing for 70 million pounds to private equity fund AnaCap Financial Partners in order to repay debt. [ID:nWLA0893]

It said it remains in talks with its financial creditors. (Editing by David Holmes) ($1 = 0.6059 pound)