HNA Group Photo: CFP

Debt-ridden Chinese conglomerate HNA Group said on Sunday that it had succeeded in resolving its debt risks, more than two years after a working group was created to restructure the company's debts.

In a post on its WeChat official account, HNA Group announced that a special service trust for its bankruptcy reorganization was established according to the law on Sunday.

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

The merger and reorganization plan involving 321 HNA Group-linked firms has been fully implemented, which has been confirmed by the court.

The announcement indicates the legal procedures involved with HNA Group's bankruptcy restructuring have come to an end, Lin Zhijie, a market watcher, told the Global Times on Sunday.

HNA Group was once a huge and far-flung multinational spanning aviation transport, airport operations, hotel management and financial services, with over 2,000 domestic and overseas subsidiaries. 

The conglomerate was hit by a liquidity crisis in late 2017, due to inappropriate operations, mismanagement, runaway investment 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 commercial cases of 2021.

HNA Group was a calling card of China's private economy, but it ultimately entered into bankruptcy reorganization due to multiple factors, Li Shuguang, a professor of the China University of Political Science and Law, was cited as saying in the statement.

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

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

In December, Fangda's aviation subsidiary in Hainan was announced to have become Hainan Airlines Holding's controlling shareholder. 

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

Deducting one-off gains or losses not arising from its normal course of business operations, Hainan Airlines Holding posted net losses of up to 10.5 billion yuan, per the estimates.  

Throughout the reorganization, Hainan Airlines' aviation safety has remained stable, with no massive layoffs or substantial spillovers of financial risks, Lin said. 

Hainan Airlines' debts have been restructured, with the injection of cash, reduction of plane lease payments and a new management mentality, he continued.

The reorganization lays the groundwork for Hainan Airlines' rebirth, the observer said, noting that the airline will still need to withstand the fallout of COVID-19 and cope with an excess of wide-body jets.
 
Global Times