Report by : Gan Yung Chyan, KUCINTA SETIA
HNA Group, which is deeply mired in debt crisis and various rumors, issued a statement on 29 January 2021 stating that creditors applied for bankruptcy and reorganization of the group due to its inability to pay off due debts.
HNA Group issued a statement through its official WeChat account, " On January 29, 2021, our group received the "Notice" issued by the Hainan Provincial High Court. The main content is: relevant creditors apply to the court because our group cannot pay off due debts, bankruptcy and reorganization of our group. Our group will cooperate with the court in judicial review and so on."
In recent years, HNA Group has been mired in the vortex of debt crisis and various rumours. Official data show that at the end of 2017, HNA had total assets of RMB 1.23 trillion and total liabilities of RMB 740 billion. However, many parties questioned that in the process of HNA's expansion, there were a large number of domestic guarantees and foreign loans, commercial bill financing, trust financing, and hidden guarantee financing, and its real debt situation was far more serious than official figures.
The mainland Caixin.com reported that HNA’s asset status and equity relationship are very complicated. It has 2,300 companies under its umbrella, 90% of which are shell companies, and nearly 200 entities actually operate. A person close to the working group said, "For the purpose of mergers and acquisitions, HNA often sets up a multi-layer structure. After the merger, except for the top and bottom layers, the rest is left unattended."
Even more shocking is that the capital exchanges between affiliated companies of HNA Group amounted to several trillions. The financial directors of various sections of HNA were called to explain the ins and outs of the funds, "Some people sweat like diarrhea and their shirts are soaked when they write information."
HNA started as a state-owned company Hainan Airlines which is established in 1989. Liu Jianfeng, the governor of Hainan at the time, was the former head of the former Communist Party leader Jiang Zemin. After that, HNA became a privatized company after several equity changes. Relying on the official background, HNA has done a lot of financing and mergers and acquisitions. It has acquired up to 50 billion US dollars of assets overseas alone. They include Deutsche Bank, Hilton Hotels, Ingram Micro International are among them, involving aviation, logistics, hotels, banks, fund management, etc. and many areas.
However, as the Chinese Communist Party tightened its control on private companies, in June 2017, the Chinese Communist Party's regulatory authorities named HNA and other four companies to transfer funds overseas in the name of overseas mergers and acquisitions. After that, banks basically stopped lending to these companies. Since then, news of HNA's capital chain breaking and involvement in the CCP's internal fighting has continued. Since then, HNA has changed from "buying, buying," to "selling, selling", busy with tail docking to survive, in a dilemma.
At the same time, there have been reports from overseas media that HNA is a small treasury for the top dignitaries of the Chinese Communist Party. According to official HNA news, former Vice President of the Communist Party of China Zeng Qinghong is the highest official who "highly praised" HNA in public. There is also news that Jiang Zhicheng, the grandson of Jiang Zemin, is one of the hidden shareholders of HNA.
In the afternoon of 22 January 2021, HNA issued an announcement stating that the "Joint Working Group of Hainan HNA Group" had completed due diligence and formulated a risk treatment plan.
On 29 February 2020, HNA announced that due to the superimposed impact of the covid epidemic, the company’s financial liquidity problems have intensified. The Hainan Provincial Government has taken the lead in the establishment of the "HNA Group Joint Working Group of Hainan Province" to station in HNA to carry out risks disposal. The working group leader Gu Gang served as the executive chairman of HNA, and the executive deputy group leader was Ren Qinghua as the co-CEO of HNA.
Nearly a year later, Gu Gang and Ren Qinghua resigned from their respective positions at HNA. Outsiders believe that this means that HNA's risk treatment plan has been recognized by key parties and will enter the implementation stage. However, the HNA announcement did not disclose the details of the disposal plan.
On 3 July 2018, Wang Jian, the co-founder and chairman of HNA, died unexpectedly during an inspection in France. There are many suspicious things about the incident, and public opinion questioned that Wang Jian was killed.
In November of that year, HNA Group and HNA Industry's assets worth 99 million RMB were seized, frozen or seized.
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