The restaurant encountered "adverse conditions" on Saturday as it was passing the Xisha Islands, also known as the Paracel Islands, in the South China Sea.

Water entered the vessel and it began to tip, according to its owner, Aberdeen Restaurant Enterprises.

The company said no one was injured, but efforts to save the vessel failed and it capsized on Sunday.

"As the water depth at the scene is over 1000 metres, (it makes it) extremely difficult to carry out salvage works," it said in a statement.

It said the company "is very saddened by this accident".

The Jumbo Floating Restaurant, almost 80m in length, had been a landmark in Hong Kong for more than four decades, serving Cantonese cuisine to more than million guests including Queen Elizabeth II and Hollywood star Tom Cruise.

It closed in 2020 due to the pandemic and laid off all its staff.

Aberdeen Restaurant Enterprises said the restaurant became a financial burden to its shareholders, with millions of Hong Kong dollars spent on its inspection and maintenance even though it was not in operation.

The restaurant was towed away last Tuesday.

The company said it planned to move it to a lower-cost site where maintenance could be carried out.

It said prior to its departure, the vessel had been thoroughly inspected by marine engineers and hoardings were installed, and all relevant approvals were obtained.

"The company is now getting further details of the accident from the towing company," the statement said.

Australian Associated Press