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HNA Spokesman Says Companies In Bankruptcy Are Mainly Chinese LTDs
By Tina Traster
It has been widely reported that China’s HNA Group Co. is in dire financial trouble and was forced into bankruptcy in January. However, the HNA Training Center in Palisades, owned by a limited liability company in Delaware, is not part of the company’s bankruptcy.
The Chinese company’s bankruptcy raises concerns as the Town of Orangetown prepares to choose a developer to acquire the HNA Training Center in Palisades and redevelop the 106-acre property into a tax ratable and community asset. However, Special Counsel Mike Zarin, hired by the Town of Orangetown to shepherd the project, says “as far as we’re aware, the asset is not encumbered by the Chinese bankruptcy.”
Zarin said the town is moving along at a good clip to choose a preferred developer to buy and transform the site.
“We have been on top of this issue (the Chinese bankruptcy) and based on information we’ve been able to compile, the bankruptcy will have little to no impact on U.S. assets,” said Zarin. “U.S. assets are not under the Chinese bankruptcy jurisdiction. We have done our due diligence.”
The HNA Training Center NY LLC, owner the property, is part of HNA North America, which is not part of the Chinese bankruptcy restructuring, which includes 320 HNA affiliates mainly in Hong Kong and China, according to an HNA spokesperson and confirmed by the National Enterprise Bankruptcy Information Platform in China.
However, the HNA Training Center in Palisades, at 334 Route 9W, has been dealing with its own financial woes. The hotel/conference center was put up for sale more than two years ago. A deal to purchase the hotel fell through after the prospective buyer failed to finance the purchase. In late 2019, ZVG@Palisades LLC, an entity affiliated with Vasco Ventures, tried to buy the property. The deal ultimately fell apart because the buyer did not have the roughly $40 million purchase price at the original closing deadline on July 10, 2019. The entity left an $8 million deposit on the table.
The hotel and conference center closed during the pandemic lockdown and never reopened. On May 3rd, 2020, the entity received $659,931 in COVID relief PPP funds. The center has not paid property taxes for at least two years; HNA is in arrears on school, town and county taxes in excess of $2 million including penalties.
The Palisades hotel and conference center was purchased by HNA Training Center NY LLC for $60 million in 2016 from IBM.
HNA has been selling off its worldwide assets over the past few years.
Zarin said the town continues to work have an “open and cooperative relationship” with HNA’s U.S. representatives though he acknowledged that working with the Chinese government and its corporate structures may prove to be complicated.
HNA Group gained worldwide attention for its aggressive purchases of well-known assets, including the Radisson hotel chain and aviation services company Swissport Group, as well as stakes in a global network of airlines and airports. But HNA and Chinese peers Dalian Wanda Group, Anbang Insurance and Fosun International were forced to rein in their free-spending ways over the past few years and pay off debt as Beijing moved to reduce systemic financial risk.
HNA, whose flagship business is Hainan Airlines, went on a $50 billion debt-fueled spending spree to build an empire that included stakes in businesses from Deutsche Bank to Hilton Worldwide. HNA also bought a Catskills Hotel, Hudson Valley Spa and Resort, which it sold in 2019.
In January, China’s HNA Group Co. filed bankruptcy, shedding light on a tangled web of financial dealings. The Hainan Province High People’s Court, which is handling the HNA case, consolidated the restructuring of HNA Group with 320 of its affiliates in mid-March. The decision to treat them as a single organization followed the court’s assessment that the group’s management was chaotic, with companies that were independent in name only. Some 67,400 creditors are seeking a total of $187 billion.
HNA creditors, which include state-owned financial firms, have asked a court in Hainan to reorganize the company and disentangle the many complex financing arrangements that once powered its aggressive global expansion. HNA, which was sunk by massive debt, said it would submit to the legal process.
Developers Vie For HNA Property In Palisades
Three muscular development teams with impressive portfolios presented visions last week to transform the now-shuttered HNA Palisades Training Center during a Town of Orangetown ZOOM meeting.
At least two developers envision a new era for the property with features that include production studios, biodynamic farms, co-working and wellness centers, while a third proposes an overhaul of the hotel and conference center. All three proposals include housing though two lack specific details in terms of density and scale.
HNA is free to market its parcel independently and retains control over whether it accepts an offer. But the town, which appears set on taking control of the parcel, says it does have one tool in its kit: eminent domain.
The town is expected to choose a preferred development sometime over the summer. Zarin said town board members will vote to decide on the preferred developer and then discussions with HNA will ensue. On Wednesday, the town will go into executive session during the public meeting to discuss “sensitive and proprietary issues” with the three applicants.