East Star Airlines' biggest creditor, China National Aviation Fuel Holding (CNAF), sent applications for the approval of the reorganization of the airline company to the Hubei Supreme Court, but their case was refused, Beijing Business Today reported on July 13. However, other airport creditors like Zhengzhou Xinzheng Airport, Guangzhou Baiyun Airport, Wuhan Tianhe Airport, Nanjing Airport, Qingdao Airport, Shenzhen Airport, Hangzhou Airport, etc, all agree to reorganize it legally.
East Star Airline, a debt-laden private carrier, is based in central China's Wuhan City. It was formed in May 2005 together with three other companies and with a registered capital of 80 million yuan, it started business operation in the following year. East Star Airline runs about 20 domestic routes in and out of Wuhan.
According to the primary checkup of East Star's bankruptcy manager, East Star owns 520 million yuan (US$76.09 million) to state-owned creditors like the airports and aviation fuel firms.
"If bankruptcy liquidation is forced on East Star, its creditors will suffer a great loss for the intangible assets of the company like its air routes and its staff can not be auctioned. Thus those creditors sent application for its reorganization." East Star's Deputy Attorney Yin Zhengyou said.
Insiders tend to believe that East Star's reorganization depends on the attitude of the Wuhan municipal government.
"The Wuhan municipal government rejected the company's reorganization for its weak management and the difficulty in recovering from an exorbitant amount of debt," an insider said.
"We will wait for the sentential result of the court. If the court still refuses to accept the case, East Star will enter the bankruptcy procedure." Yin Said.
For more information, please consult the original report in Chinese at:
http://finance.ifeng.com/news/industry/corporate/20090713/924230.shtml
(China.org.cn by Li Xiaohua July 13, 2009)
