Creditors of struggling Chinese conglomerate HNA Group have applied for bankruptcy proceedings after a court said the company was unable to pay its debts.
In a statement late on Friday, HNA said it had received notice from a court in Hainan, the Chinese province where it is headquartered, that creditors had applied for the bankruptcy and reorganisation of the group.
The company, which started life as an airline and took on huge debt to expand into one of China’s flagship global conglomerates, said it would co-operate and “support the court to protect the legal rights and interests of creditors”.
Over recent years, HNA has struggled with increasingly unmanageable debt levels following a series of high-profile overseas investments, including stakes in Deutsche Bank and the Hilton Worldwide hotel chain.
But Friday’s events also reflected years of pressure from the Chinese government on the country’s “grey rhino” companies — those that might cause problems but are being ignored.
The bankruptcy of a once-dominant force in China’s corporate landscape comes after the government unexpectedly halted the initial public offering of Ant Group, in what was also interpreted as a sign of Beijing reining in the power of its corporate titans.
It is the culmination of a wave of financial challenges for HNA, which has wound down many of its operations but has continued to run its airline business. Chen Feng, the founder and chairman, was barred in September from taking flights and high-speed rail after the group failed to make a court-ordered payment.
HNA’s well-documented debt problems were compounded by the pandemic, as well as factional rifts following the death of a top executive, Wang Jian, in 2018.
After that happened, a team from China Development Bank, one of the group’s creditors, stepped in to unwind its many investments. It no longer owns a stake in Deutsche Bank, of which it once owned almost 10 per cent.
Trading in an HNA bond was halted in April after the group informed investors at the last minute that it would delay by a year interest and principal payments on a bond issued in 2013.
By the time of its peak in 2017, HNA had bought more than $40bn of global assets. It was one of several companies, including Anbang Insurance Group, Fosun International and Dalian Wanda Group, that became known for their overseas acquisitions.
Anbang was put under government control in 2018 and its chairman, Wu Xiaohui, was sentenced to 18 years in prison for fraud.
Additional reporting by Sherry Fei Ju in Beijing