HNA Group’s leader Gu Gang rallies staff after conglomerate enters bankruptcy restructuring, saying light is at the end of tunnel

In a letter that was light on specifics on HNA Group’s restructuring, Gu Gang urged for “patience” and “hard work”
Gu called on staff to help the Haikou-based company pull through its darkest hour, according to a letter posted on HNA Group’s corporate WeChat account

HNA Group

Pearl Liu

Published: 4:27pm, 30 Jan 2021

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Gu Gang, head of the working committee responsible for untangling an estimated 500 billion yuan (US$77.8 billion) of debt owed by one of China’s biggest global asset buyers, has written to his staff to rally for their patience while the company goes through bankruptcy restructuring.

In a letter that was light on specifics on HNA Group’s restructuring, Gu urged for “patience” and “hard work” to help the Haikou-based company pull through its darkest hour, according to a letter widely circulated on Chinese social media. HNA Group executives were not immediately reachable to verify the letter’s authenticity.

“We’ve been fumbling in a pitch black tunnel for three years,” Gu wrote in the so-called family letter to 100,000 of his colleagues, emphasising that the past 12 months had been spent in preparation for restructuring, not bankruptcy.“Through our work in the past year, we can finally see the light at the end of the tunnel.”

The rallying cry by the leader of HNA Group, appointed in February 2020 by regulators and the Hainan provincial government to lead the company’s debt workout, comes a day after one of China’s largest private conglomerates received a court petition to undergo bankruptcy restructuring. Earlier this week, HNA Group’s founder Chen Feng was left out of the company’s Communist Party committee, a sign that he was no longer involved in key decisions involving the airline-to-property group.

An undated photograph of HNA Group’s leader Gu Gang. Photo: Sina

HNA Group was established on the foundations of Hainan Airlines in 1993 by Chen, who worked for the civil aviation authority before going into business.

The airline, which stood out from other state-owned Chinese airlines with its punctuality, in-flight service and new fleet, quickly won legions of loyal travellers and expanded. The airline even counted US financier George Soros as its largest foreign shareholder, an endorsement and investment that helped it venture abroad into logistics, tourism and real estate.

Chen Feng, founder and former chairman of HNA Group in the cockpit of an Airbus A330 aircraft operated by HNA Group’s Hong Kong Airlines subsidiary at the Hong Kong International Airport on June 15, 2010. Photo: SCMP

By 2017, the group had ballooned into a global conglomerate with 290,000 employees, with at least 1 trillion yuan in assets. Fuelled by bank loans and armed with money earned from its aviation business, HNA Group went on a US$48 billion shopping spree, raking up stakes in Hilton Hotels and Resorts, Deutsche Bank and Ingram Micro, among dozens of other brand name assets. Chen’s ambition was to buy HNA Group’s way the Fortune 100 list of the world’s largest companies by assets.

The acquisition spree came to an end in 2017 when China’s financial regulators, fearful of risks to the banking industry, cracked down on the debt-fed binge, putting HNA Group, Anbang Group, Dalian Wanda Group and Fosun Group under scrutiny. Anbang, an insurer turned asset buyer – it made a failed US$13 billion bid to take over Starwood Hotels – has since been put under state ward and its former chairman thrown into jail on fraud and embezzlement charges.

That expansion at break-neck speed, described by Gu as driven by “hasty decisions,” left HNA Group with “one huge bottomless pit after another” that caused its portfolio of assets to be force sold.

“All we suffered and all of our efforts served only one purpose - a successful restructuring,” Gu said. “It is only through bankruptcy and restructuring that we can be reborn.”

“Let’s continue to battle as the bugle has sounded,” he wrote. “We should not look back and only move forward. What we see now is a glimmer of light, and I believe that when we get out of the tunnel, we will see the sun shining.”