Chinese Internet technology company Cloud Live Tech Group became the second listed company in China to default on a corporate bond payment, failing to repay some 240 million yuan ($38.8 million) to investors.

The default will throw a spotlight once more on the efficacy of China's corporate bankruptcy law, and the government's willingness to let investors incur losses when companies go under.

China's government has a track record of being reluctant in letting investors take losses when companies fail, partly out of concern of stoking public discontent, especially at a time when a cooling Chinese economy has heightened financial stresses.

In a statement to the stock exchange Cloud Live said it faced a cash shortfall of 240.6 million yuan despite fund-raising efforts.

"On this default, the company extends its most sincere apology to all bondholders of the ST Xiange bond," it said.