Irish drugmaker Elan Corp. risks defaulting on debt payments of $2 billion due to delays in accounting for research joint ventures it established in Bermuda.

Bloomberg Business News reported yesterday that the delays in reporting its 2002 results lets creditors demand immediate payment of as much as $2 billion, putting the company at risk of default.

"We don't have the cash on hand if all the debt comes due in the next two or three months," chief executive officer Kelly Martin told Bloomberg in an interview. "The worst case scenario is the debt structure is accelerated, and that's an unacceptable option to run and operate the company."

Elan's market value sank to $1.8 billion from $26 billion two years ago after the US Securities and Exchange Commission started probing partnerships that Elan's former managers set up to keep research costs off its balance sheet. Bloomberg repeated that Elan can't file its annual report until it finishes negotiations with the SEC, begun in February 2002, over accounting for the off-balance-sheet partnerships.

Elan formed the partnerships, or special purpose entities, by investing in smaller drugmakers and biotechnology companies. It then sold securities backed by these entities, called Elan Pharmaceutical Investment Ltd., or EPILs. Investors receive interest and get their principal back after several years. Elan has had to put funds aside to back the EPILs as the value of the partnerships fell.

The SEC is looking at the way Elan accounted for the EPILs, which are based in Bermuda.

The failure to file allows the holders of EPIL II and EPIL III investments to ask the company for repayment sooner than expected, Mr. Martin said. He planned to talk to the EPIL investors today.