HNA once wanted to rule the world. Now is on the verge of bankruptcy

HNA once wanted to rule the world. Now is on the verge of bankruptcy

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Creditors to the Hainan-based company have asked a Chinese court to approve plans for the company’s bankruptcy, HNA said in a statement Friday. Creditors said the conglomerate could not pay its debts.

The bankruptcy filing marks a dramatic decline for one of the country’s most important companies. HNA started life as an airline, but grew rapidly through real estate and financial investments, and acquisitions abroad, to become one of the most important players in China’s private sector.

Xi Jinping wants Chinese private companies to fight alongside the Communist Party
Beginning in 2015, HNA embarked on a $ 40 billion shopping spree that included investments in Hilton (HLT) and German bank (DB). At the end of 2017, HNA’s assets exceeded 1.2 trillion yuan ($ 186 billion).

But these acquisitions were built on many debts, which reached 707 billion yuan (US $ 110 billion) in June 2019. The company’s problems were exacerbated by the coronavirus pandemic and, in February 2020, government officials in Hainan took control. At the company’s request, the authorities established a “working group” with other agencies in an attempt to resolve the HNA financial crisis..

HNA’s impending bankruptcy is also the latest sign of the end of some of China’s most aggressive global negotiators. Anbang Insurance, another large conglomerate that made huge purchases abroad, was seized by Chinese regulators in February 2018. It has previously owned Waldorf Astoria and Strategic Hotels & Resorts.

Meanwhile, Beijing has been trying to increase its control over the country’s private sector. Much of the scrutiny of companies like HNA and Anbang began in 2017, when regulators began to take a closer look at their extravagant businesses abroad, concerned with liquidity risks.

In the years since, Chinese authorities have taken further steps to keep private companies on track. The ruling Chinese Communist Party last September, for example, published an exceptionally frank set of guidelines that call on its members to “educate private businessmen to use as weapons [Xi’s] ideology of socialism. “
Recently, regulators have also been looking for ways to crack down on the country’s massive technology industry. Alibaba (NANNY) was recently the target of an antitrust investigation and its financial affiliate, Ant Group, was asked to revamp its business.

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