The Application Of HNA Group Bankruptcy Restructuring Service Trust

In recent years,the international situation has changed dramatically,and China’s macro economy has continued to decline.Many highly leveraged enterprises have fallen into financial crises,bond defaults have occurred frequently,and a large wave of listed companies have faced bankruptcy and liquidation.The new bankruptcy reorganization procedure under the Enterprise Bankruptcy Law,which came into effect in 2007,serves as a buffer procedure for enterprises prior to liquidation.It allows companies to optimize the allocation of resources and the disposal of debts in order to get rid of financial burdens and recreate operational value,giving distressed companies a way to regain their lives with a fair settlement of debts.However,the choice of reorganisation model is crucial if the reorganisation objectives are to be achieved.There is a pressing need to develop a reorganisation plan and to structure it in a way that effectively protects the interests of stakeholders.The HNA Group,once a large multinational conglomerate with trillions of dollars in assets,has continued to resort to extreme mergers and acquisitions in order to expand its business footprint as it implements business expansion.But this approach poses great risks to the Group and harbours many unpredictable crises.HNA Group suffered a liquidity crisis in late 2017,triggering a series of serious debt problems that forced it to undergo bankruptcy restructuring.Taking the HNA Group as an example,this article discusses in depth the operational model of a special service trust set up in the bankruptcy restructuring process,thus revealing the unique advantages of this trust model and providing an effective solution for the bankruptcy restructuring of large corporate groups.This article firstly introduces the concepts and models of bankruptcy restructuring and bankruptcy restructuring service trusts,leading to the view that the establishment of service trusts can be a solution to break the deadlock of bankruptcy restructuring and resolve the debt risk of enterprises,which is worthy of high attention and discussion in both theoretical and practical circles.The paper then begins with the reasons for selecting HNA Group as the subject of the case study,and provides a detailed overview of its basic information,development history,substantive consolidation and restructuring plan and service trust structure,as well as an analysis of the structure and operation model of HNA Group’s bankruptcy restructuring service trust.This article compares the HNA Group’s operating model of introducing a service trust for debt settlement in a survival reorganisation with the "selling bankruptcy reorganization +service trust" model and analyses its features and the reasons for its application to the HNA Group’s bankruptcy reorganisation.Finally,it is concluded that the use of service trusts in bankruptcy restructuring can properly address the pain points faced by various parties in the restructuring game,such as the divestiture of non-core assets,the duration of disposal and the value of disposal,and ensure that the process of bankruptcy restructuring can proceed smoothly and the restructuring plan can be implemented smoothly.It also provides insights into the use of service trusts in bankruptcy restructuring,with a view to providing guidance and reference for the use of service trusts by restructuring enterprises in the future,and is of great relevance to similar enterprises going through bankruptcy restructuring in the future.This article uses case studies and comparative analysis to analyse the HNA Group bankruptcy reorganisation case,examining its innovative "survival bankruptcy reorganization +service trust" model,and analysing the characteristics and applicability of this model.The study and analysis of this typical case of an bankruptcy restructuring service trust can better promote the universal application of the system and can effectively address its problems.This will promote the development of enterprise bankruptcy restructuring in China and provide important theoretical reference and practical guidance for improving the enterprise bankruptcy mechanism.