As the fate of Evergrande and its chairman Xu Jiayin collapsed under millions of debt, on September 24, another private enterprise giant HNA (HNA Group Co., Ltd.) – currently in receivership – via its official WeChat website, announced that its chairman and CEO have been arrested.
The news was also confirmed the same day by Gu Gang, head of the joint task force and secretary of the Chinese Communist Party Committee of the HNA at a meeting of party cadres. The joint task force resumed the sale of HNA after the latter went bankrupt on January 29.
HNA and Evergrande are both private companies listed in the Fortune Global 500 and both have faced serious tensions in recent years. With the arrest of the chairman of HNA, the chairman of Evergrande, Xu Jiayin, is also in the spotlight.
Although Evergrande has denied rumors of bankruptcy restructuring, according to its financial report (pdf), at the end of June, Evergrande’s total liabilities reached 1.97 trillion yuan ($ 305.4 billion), almost 280% more than HNA’s total liabilities.
Before its bankruptcy, HNA’s total liabilities reached 700 billion yuan ($ 108 billion).
Some of Evergrande’s defaults are linked to ongoing real estate development, such as overdue construction workers’ wages, which have resulted in many projects being suspended.
Evergrande tenuous a meeting on September 1 to sign a guarantee to “ensure delivery of the buildings”.
Chinese state media Sina reported in August that the company said it expected sales to decline for September due to negative media coverage.
Xu, Evergrande’s largest shareholder, has tried to ease cash flow by selling assets such as investment properties, hotels and other properties. However, the sale of the Evergrande office building in Hong Kong was not completed as planned as two Evergrande subsidiaries were unable to meet their warranty obligations on time, according to the media outlet. Chinese state Sina on September 14.