Embattled Chinese conglomerate HNA Group said some of its creditors have filed a court petition for its bankruptcy and reorganization after it failed to repay its debts on time.
The company said it would cooperate with the legal proceedings and restructure its debts, while ensuring its operations including the flagship carrier Hainan Airlines continue normally.
The development adds to the woes of what was once one of China’s most acquisitive companies. HNA aggressively scooped up trophy assets around the world from 2015 to 2017, buying stakes in the Hilton hotel chain, Deutsche Bank AG and high-end commercial real estate in more than $40 billion worth of deals.
HNA piled on debt in the process, before its activities drew scrutiny from Chinese authorities and bond investors grew worried about its mounting liabilities. The group subsequently sold many of its overseas assets, which also included a California-based electronics distributor, New York office towers and a Swiss cargo handling business.
The group had the equivalent of roughly $76 billion in total short-term borrowings and long-term debt at the end of June 2019, according to data compiled by S&P Capital IQ.
While domestic air travel in China gradually bounced back over the course of last year, that recovery was counterbalanced by the suspension of most international flights after China closed its borders to most foreign travel in March.
Hainan Airlines, which built its reputation on its international services, was hit badly. In an unaudited report, the airline said that total traffic, including that of some subsidiaries, dropped 54.7% in 2020 from a year earlier.
The Shanghai-listed carrier also said it lost 15.6 billion yuan, equivalent to $2.43 billion, in the first nine months of 2020, a period in which its revenue tumbled by two-thirds from a year earlier to 19.8 billion yuan.
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