TORONTO - Wood flooring and lumber products firm Sino-Forest faces a class action suit from bond holders after defaulting on an interest payment.

Based in China and traded on the Toronto stock exchange, the lumber and wood product firm's board was asked to step down by its largest shareholder.

Sino-Forest has been fending off criticism since investment analyst Muddy Waters LLC issued a report charging it with misrepresentation of its assets. The Toronto Exchange suspended trading in Sino-Forest's shares pending an investigation of the charges.

Richard Chandler, an investment group in New Zealand, called on the Sino-Forest board to be replaced after it defaulted on a $9 million bond interest payment, while spending $40 million on an internal investigation aimed at rebutting Muddy Water's claims.

At issue is a representation of timberland assets made by Sino-Forest in its public filings. While it claimed to own timberland within China, legally it has timber rights, not legal title to the property itself, say analysts.

Sino-Forest is a vertically integrated wood products firm, holding timberland, milling lumber and producing wood flooring and other wood products.