No first-class flights. No holidays. No high-speed rail tickets or lavish weekends on the golf course.
A Chinese courtroom this week barred Chen Feng, the chairman and co-founder of the Chinese conglomerate HNA Group, from making massive purchases after the corporate didn’t pay cash it owed in two authorized settlements, a humbling flip of occasions for what was as soon as one of many nation’s largest and most acquisitive enterprise empires.
China has for years used spending restrictions as a technique to implement money owed and discourage irresponsible borrowing. It has even made details about defaulters publicly searchable on-line, as a type of blacklist of those that are prohibited from forking out on journey, actual property and costly personal colleges for his or her youngsters.
An HNA consultant didn’t reply to a request for remark.
Mr. Chen, who’s in his mid-60s, helped rework a Chinese regional airline primarily based on the island province of Hainan into a world company behemoth. HNA took stakes in corporations together with Hilton Hotels, Deutsche Bank and Virgin Australia. It purchased up trophy properties and golf programs. Mr. Chen and his brother every bought a complete ground at One57, an ultra-luxurious Manhattan residential tower.
But the debt the corporate took on to make these purchases grew so giant that it drew the eye of the Chinese authorities. In current years, HNA has unloaded billions of of holdings. Investors dumped its bonds. It even asked its own employees to lend it money, though company representatives have said that only small amounts were raised this way.
The two lawsuits that led to the restrictions on Mr. Chen’s expenditure were brought against HNA by Chai Jing, 50, a resident of the Chinese city of Xi’an.
In 2018, Ms. Chai had purchased two investment products from Jubaohui, an online financial platform owned by HNA. When she did not receive what she was owed under the terms of the investment agreement, she sued. In March, a district court in Xi’an ordered HNA to pay her roughly $50,000 in principal, plus interest. The court said this week that the company had failed to do so.
Not long ago, HNA had $145 billion in assets and $90 billion in annual revenue, most of it from companies acquired outside China. Even after the struggles of recent years, the Hurun Report, a research organization in Shanghai that tracks the wealthy in China, estimated Mr. Chen’s wealth in 2019 to be $1.9 billion.
HNA and its aviation business had been under financial pressure even before the coronavirus pandemic slammed the entire global travel industry this year. In February, the company said it had begun working with the Hainan government on a restructuring with its creditors.