Shares in listed subsidiaries of China’s troubled HNA Group, once the driving force behind a wave of overseas Chinese dealmaking, fell sharply after several of them revealed that billions of dollars in funds had been misused.

The disclosures were the latest ugly twist in the collapse of the conglomerate, originally a domestic airline operator that grew rapidly thanks to a debt-fuelled dealmaking binge where it spent more than $40bn, including on stakes in Deutsche Bank and hotel operator Hilton International.

In a statement to the Shanghai stock exchange this weekend, Hainan Airlines Holding Co said that “self-investigations” revealed billions of dollars of company funds had been used for non-business purposes.

Hainan Airlines, and two other HNA companies CCOOP Group and HNA Infrastructure Investment Group, also said in filings that they had failed to disclose debt guarantees between companies within the group.

The revelations on Monday sent shares in the listed HNA division tumbling. Both Hainan Airlines Holding Co and CCOOP Group dropped almost 10 per cent, the daily limit for exchanges in Shanghai and Shenzhen.

Shen Meng, director at Chanson & Co, a boutique investment bank in Beijing, said large parts of the funds under question were unlikely to be recovered in full, which would have a “negative impact on the rights and interests of creditors”.

The disclosures come as HNA creditors last week applied to commence bankruptcy proceedings, after a court said the company was unable to pay its debts. HNA said it would co-operate and “support the court to protect the legal rights and interests of creditors”.

Before it began to buckle under the weight of its debt-fuelled dealmaking and questions over its ownership structure, HNA grew to rank 170th on the Fortune 500 list of the world’s biggest companies in 2017.

Over the past few years, it has come under pressure from Beijing as part of increased scrutiny of a group of expansionary conglomerates that also includes Anbang and Dalian Wanda.Chen Feng, current chairman of HNA, was banned from taking flights and using high-speed rail last year after the group missed a court-ordered payment.

Wang Jian, co-founder and former chairman, fell to his death in 2018 while sightseeing in southern France. HNA’s leading creditor, state-owned China Development Bank, stepped in to unwind some of its investments in 2018 following Mr Wang’s death.

The change in the political climate for big business in China, which has contributed to significant falls in Chinese outbound investment, was thrown into sharp relief last year when the initial public offering of financial technology business Ant Group, projected to be the largest in the world, was cancelled at the last minute.

Additional reporting by Sherry Fei Ju in Beijing