HNA Group has sued Hong Kong Airlines Consultation Service Co Limited and Hong Kong Airlines Holdings Co Limited over their alleged failure to repay a total debt of HKD1.17 billion Hong Kong dollars (USD149.8 million), the South China Morning Post has reported.
According to court papers seen by the paper, the lawsuit against Hong Kong Airlines Consultation Service covers its alleged failure to repay two promissory notes for HKD385 million and HKD390 million Hong Kong dollars, issued in 2010 and 2013, respectively. The other lawsuit covers another alleged failure to repay a promissory note for HKD390 million Hong Kong dollars.
Hong Kong Airlines Consultation Services is controlled by Zhong Guosong and owns a 27% stake in Hong Kong Airlines. Zhong proclaimed himself to be the carrier's controlling director after a boardroom coup in April this year following which he sought to bar HNA Group-backed executives from taking managerial decisions. The dispute is now subject to court proceedings.
Zhong bases his claim to the ownership of Hong Kong Airlines on the fact that he is allied with investment firm Frontier Investment Partner, which owns a 34% stake in the airline. However, Frontier Investment Partner was involved in a transaction concerning its shares in Hong Kong Airlines. The courts are now analysing whether the fund legally sold its stake prior to Zhong's coup.
HNA Group holds a 29% stake in Hong Kong Airlines.
