As a result of a petition from an unnamed creditor, the Hainan High People’s Court has initiated bankruptcy reorganisation proceedings against HNA Group. “On January 29, 2021, HNA Group received a formal notice from the Hainan High People’s Court,” the holding said in a statement.
“The main content of the notice is: a creditor has filed an application for the initiation of reorganization procedure against our company, on [the] grounds that we cannot pay off due debts to the creditor.”
The HNA Group owns a massive 2,300 companies and approached the province of Hainan for assistance back in February 2020 after its own “self-rescue” efforts had failed, after which the province set up a working group to establish a clearer picture of the Group’s assets and debts and took over the running of the Group. However, this latest move will not affect the aviation arm of the group, which comprises some 14 companies and 700 aircraft.
Shortly prior to HNA Group’s announcement, Bloomberg reported that the Chinese government was planning to downsize the holding through the sale of all non-aviation assets via a trust. The group’s airline businesses would then continue to operate albeit as state-owned entities. HNA Group’s numerous creditors would then be offered either a stake in the trimmed-down, aviation-only holding, or participation in the proceeds from the trust-run sell-off. The plan has yet to be formalised.
