DeHeng Advised Fangda Group on Becoming

the Ultimate Strategic Investor in HNA Group’s Main Aviation Business

2021-11-02

On October 31, 2021, the Higher People's Court of Hainan Province ruled to approve the Restructuring Plan of Hainan Airlines Holding Co., Ltd. and Its Ten Subsidiaries and the Restructuring Plan of the Substantive Consolidation and Reorganization Case Involving 321 Companies including HNA Group Co., Ltd. It marked that the restructuring and insolvency work of HNA Group's main aviation business entered into the restructuring execution stage.

The restructuring and insolvency of HNA Group's main aviation business, especially those of Hainan Airlines and its 10 subsidiaries, involve significant production safety， extensive distribution of assets, special and complex forms, huge scale of liabilities and numerous creditors, contractual relationships across domestic and foreign borders and complex application of laws. It is by far the largest listed company restructuring case by assets and liabilities involved in China. It is also the first restructuring and insolvency case in the airline industry in China, and the largest restructuring and insolvency case in the world's public transport airlines.

As Fangda Group's legal counsel in the restructuring and investment of HNA Group's main aviation business, DeHeng assisted the client in winning the bid through strict selection and evaluation procedures, and was confirmed by Hainan Higher People's  Court's as the ultimate strategic investor in HNA Group's aviation business. 

In view of the complex situation of the restructuring and insolvency work of HNA Group's aviation business, the DeHeng lawyers gave full play to DeHeng's domestic and global networks, provided Fangda Group with whole-process legal services including due diligence, restructuring investment scheme design, drafting restructuring investment agreement and restructuring investment implementation contract, and formulating the risk control plan. In addition, they worked with Fangda Group, Hainan Airlines and the administrators of HNA Group to protect the overall operating value of HNA Group's aviation business, maximize the value of restructured assets, and won unanimous recognition and praise from all stakeholders.

According to the above two restructuring plans approved by the Hainan Higher People's Court, Fangda Group will invest RMB 38 billion in cash into HNA Group's aviation business and provide an additional RMB 3 billion for risk mitigation, totaling RMB 41 billion, making it the largest M&A case in the history of China's aviation industry.

As the legal counsel, the DeHeng team, led by partner Li Zhe of its Beijing Office, and with primary support from lawyers Huang Xiaoxing, Hou Yang, Wang Bing, Lei Dan, Wang Yaru and Xu Yichao, worked closely and actively with other parties involved, and provided high-quality and efficient legal services for the client.

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