A court in China has officially designated heavily indebted Haikou-based conglomerate HNA Group as “discredited”, or laolai, a derogatory term for people or companies that fail to pay back money, the People's Daily newspaper of the Central Committee of the Communist Party of China reported.
The Beilin District People's Court of Xi'an municipality in China's central Shaanxi Province also barred the group's chairman and legal representative Chen Feng from travel by air and high-speed train, taking holidays, and staying at star-rated hotels as part of an order to restrict his personal consumption.
The court's ruling was in retaliation for the group failing to pay CNY37,000 yuan (USD5,500) on time.
Chen has also been banned from buying real estate and high-premium insurance, from spending at nightclubs and golf clubs, and from allowing his children to attend private schools, the court papers from September 15 showed.
Such court-ordered bans in China do not have fixed time periods and there have been cases where they have been lifted after the defendants paid, Reuters reported.
The sum in question stems from money that HNA Group and three affiliated companies were ordered to return to a plaintiff named Chai Jin, who had launched a dispute involving the group’s high-interest online investment platform Jubaohui. The accused had allegedly failed to pay the amount within ten days of the March ruling.
Established in 2014, Jubaohui has struggled to pay overdue debts to its investors since early 2018, which now total more than CNY37 million (USD5.5 million).
HNA Group, which holds stakes in or owns several Chinese carriers, including Hainan Airlines (HU, Haikou), has been under intensifying pressure since the coronavirus outbreak and is currently undergoing restructuring led by the Hainan government. As previously reported, the group and its affiliates delayed payments on a series of bonds earlier this year.
It also faces the risk of its stakes in overseas entities such as Virgin Australia (VA, Brisbane International) and groundhandling firm Swissport being wiped out, the South China Morning Post reported, and it is looking to sell assets including Hong Kong Airlines (HX, Hong Kong International).
