China’s HNA Group admits to ¥1.1tn debt pile

HNA Group owes CNY1.1 trillion yuan (USD171 billion) to creditors, its court-appointed restructuring chief Gu Gang told a gathering of about 2,000 Communist Party officials and employees of subsidiaries on September 30, HNA revealed on its official WeChat account.

The sum, cited as the group’s total liabilities for the first time, is out of CNY2 trillion (USD310 billion) in claims that creditors have submitted since HNA Group’s bankruptcy process started in late January. The sum-up assembly came at the end of a week-long series of meetings with creditors and investors before the start of China’s National Day and Golden Week celebrations (October 1-7).

However, Gu did not elaborate publicly on how the amount was determined, and little of what occurred at the four days of meetings was revealed, but a series of regulatory filings have provided some insights.

The Hainan High People’s Court overseeing the restructuring expects the embattled conglomerate’s restructuring to conclude in November, after creditors have completed voting on the draft restructuring plan before October 20. The plan envisages reorganising HNA’s 321 companies into four independent entities: airline; airport; finance; and other businesses including commercial, shipping, and shipbuilding.

Chinese industrial conglomerate Liaoning Fangda Group Industrial Co Ltd intends to restore the airline entity – which is based around Hainan Airlines (HU, Haikou) and seven other carriers it owns – as a “healthy business”. Mixed-ownership Fangda Group has a recent history of expanding its asset portfolio by acquiring state-owned enterprises on the verge of bankruptcy, reorganising them, promoting them to the capital markets, and flipping them for profit.