DUBLIN, July 16 (Reuters) - Debt-ridden Irish drug maker Elan Corp Plc moved closer yesterday to the prospect of a potentially crippling debt default but did give investors a strong signal that the crisis could still be averted.

Elan said it had missed a second deadline for the filing of its 2002 US accounts but indicated in the same statement that an inquiry into its complex book-keeping had narrowed, improving its chances of filing in time to avoid a technical bond default.

"The potential restatement looks to have been substantially reduced which should put them in a good position to file their annual accounts," said Peter Frawley of Merrion Stockbrokers.

Elan, saddled with some $2.2 billion in debt, is locked in discussions with the US Securities and Exchange Commission (SEC) over its accounting treatment of some special purpose entities - a means of raising cash off-balance sheet.

Last month Elan said the SEC was questioning three of the off-balance sheet entities. However yesterday's statement said the SEC was now interested in only one of them.

Shares in Elan, once Ireland's biggest company by stock market value, reversed an early decline, rising 5.4 percent to 5.8 euros yesterday on a mildly negative Dublin market.

Elan warned last month that a wider run on its debts -- running to more than $2 billion - triggered by the breach of bond convenants could precipitate its collapse, despite the fact it has been selling assets to raise cash.

A delay in filing beyond July 30 could bring the firm into technical default on two series of bonds - the EPIL II and EPIL III series of notes amounting to around $840 million.

A further delay in filing beyond September 14 could trigger immediate repayment of Elan's Senior Notes, worth $640 million.

Analysts believe bond-holders are unlikely to risk the collapse of Elan by insisting on a recall of the debt.

"The question is whether they can get the accounts through by July 30, but the chances are that even if it wasn't finalised by then the EPIL holders would give a waiver anyway which would push it on to September 14 and the chances are it should be resolved by that stage," Merrion's Frawley said.

Goodbody Stockbrokers' Ian Hunter concurred, saying he was "comfortable" the issue would be resolved "well before" September 14, but added that a failure to file the annual accounts by July 30 would further jangle investor nerves.