Debt-Riddled Chinese Conglomerate HNA Group Resolves Risks After 2 Years

HNA Group Photo: CFP

Debt-ridden Chinese conglomerate HNA Group said on Sunday it had successfully resolved its debt risks, more than two years after setting up a task force to restructure the company’s debts.

In a post on its official WeChat account, HNA Group announced on Sunday that a special service trust for its bankruptcy reorganization has been established in accordance with the law.

The High People’s Court of Hainan Province in southern China approved HNA Group’s restructuring proposal on October 31, 2021. A consortium formed by CITIC Trust Co and Everbright Xinglong Trust Co was ultimately chosen as the trustee, we read in the post.

The merger and reorganization plan involving 321 companies related to the HNA Group has been fully implemented, which was confirmed by the court.

The announcement indicates that legal proceedings related to HNA Group’s bankruptcy restructuring have been completed, Lin Zhijie, a market watcher, told the Global Times on Sunday.

HNA Group was once a huge multinational company covering air transport, airport operations, hotel management and financial services, with more than 2,000 domestic and foreign subsidiaries.

The conglomerate was hit by a liquidity crisis at the end of 2017, due to inappropriate operations, mismanagement, runaway investments and a market downturn, which turned into a severe insolvency crisis. , the Supreme People’s Court said in a statement in late January outlining 10 major business cases. of 2021.

HNA Group used to be a calling card of China’s private economy, but it eventually went bankrupt due to multiple factors, Li Shuguang, a professor at China University of Political Science and Law, was quoted in the statement as saying.

The case is currently the largest in Asia in terms of debt size, number and diversity of creditors and number of companies that had to be restructured, according to Li. The restructuring case is also a rarity that was heard directly in a higher people’s court.

As part of the restructuring, Hainan Airlines Holding Co, the mainstay of HNA Group’s core aviation operations, disclosed in September 2021 that Liaoning Fangda Group Industrial Co would be featured as a strategic investor.

In December, Fangda’s aviation subsidiary in Hainan was announced to have become the majority shareholder of Hainan Airlines Holding.

In a filing with the Shanghai Stock Exchange in January, Hainan Airlines Holding estimated its net profit for the past year at a range of 4.5 billion yuan ($692.13 million) to 6.2 billion. yuan, citing the return to profits enabled by the restructuring.

By deducting one-time gains or losses not resulting from its normal course of business, Hainan Airlines Holding recorded net losses of up to 10.5 billion yuan, according to estimates.

Throughout the reorganization, Hainan Airlines’ flight safety has remained stable, with no massive layoffs or substantial financial risk fallout, Lin said.

Hainan Airlines’ debts have been restructured, with the injection of cash, the reduction of aircraft lease payments and a new management mentality, he said.

The reorganization lays the foundation for Hainan Airlines’ revival, the Observer said, noting that the airline will still have to weather the fallout from COVID-19 and deal with an excess of wide-body aircraft.

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