HNA Group, the parent company of Hainan Airlines, has applied for bankruptcy and reorganization after a long period of financial difficulties. The conglomerate said it has received a notice from the Hainan High People’s Court that creditors had sought the company’s bankruptcy and restructuring, after a government-led effort to reschedule its debts did not succeed. HNA said it will cooperate with the court and push forward debt restructuring. It will also support the court’s efforts to protect the legitimate rights and interests of the creditors and ensure normal operations of the company. HNA Group will undertake a series of measures, such as debt transfer, debt-swaps and debt restructuring, and look for new strategic investors, an unidentified HNA executive told the China Daily. Introduction of new strategic investors will bring new funds that could put the company back on the healthy track, he added. 

The debt-ridden group requested Hainan province for  assistance last year in February after its “self-rescue” efforts failed. The provincial government formed a joint working group in an effort to streamline the shareholdings of more than 2,000 enterprises under HNA Group to get a clear picture of the total assets and debts. 

The executive said the bankruptcy and restructuring will not affect HNA’s aviation business, which comprises 14 companies and 700 commercial aircraft and is the country’s fourth largest air carrier. Gu Gang, former Executive Chairman and Board Member of HNA, has resigned and was appointed Party Secretary of HNA Group, the China Daily reports. 

Once an aggressive dealmaker that spent extravagantly to buy stakes in foreign assets like Hilton Worldwide Holdings and Deutsche Bank, HNA Group, the owner of Hainan Airlines, started to save itself by selling some of its assets after a liquidity crisis gripped the company in 2017, focusing on its airline and tourism businesses, the Global Times reports. After years of debt and liquidity woes came the coronavirus pandemic, which plagued tourism and disrupted the aviation sector. In a statement on HNA’s WeChat account, the company said that risk disposal work is gradually being carried out, but the “severity of risks” must be given high attention. HNA Group owns more than 2,300 companies and has 290,000 employees. As of June 2019, HNA Group’s total assets were worth CNY980.62 billion with its gross liabilities reaching almost CNY706.73 billion. HNA also owns 25% of Hilton Worldwide, and is one of the biggest conglomerates in China.

Chinese Securities Regulatory Commission Chairman Yi Huiman said the Commission would strictly supervise companies’ delisting and encourage them to use different methods, such as expanding reforms, reorganizing the enterprise and taking the initiative to leave the market.