Dahua Certified Public Accountants (special general partnership)
About Hna Investment Group Co.Ltd(000616)
Reply to letter of concern
Dahuhezi [2022] No. 009147
Dahua Certified Public Accountants (special general partnership)
DaHuaCertifiedPublicAccountants（SpecialGeneralPartnership）
Dahua Certified Public Accountants (special general partnership)
About Hna Investment Group Co.Ltd(000616)
Reply to letter of concern
Table of contents page 1 reply to Hna Investment Group Co.Ltd(000616) 1-9 concern letter
Dahua Certified Public Accountants (special general partnership) 12 / F, building 7, No. 16 courtyard, Middle West Fourth Ring Road, Haidian District, Beijing [100039] Tel: 86 (10) 58350011 Fax: 86 (10) 58350006 www.dahua-cpa com. About HNA Investment Group Co., Ltd
Reply to letter of concern
Dahuhezi [2022] 009147 Shenzhen Stock Exchange:
We have received the letter of concern on Hna Investment Group Co.Ltd(000616) (company department concern letter [2022] No. 225) (hereinafter referred to as the “concern letter”) from your office transferred from Hna Investment Group Co.Ltd(000616) (hereinafter referred to as “HNA investment”), and we have carefully verified the concerns in the concern letter that require the verification opinions of the annual audit accountant, and now reply as follows:
On April 16, 2022, your company disclosed the announcement on the company’s acceptance of guarantee from related parties. Your related party Hangzhou Huating yunqi resort Co., Ltd. (hereinafter referred to as “Hangzhou yunqi”) issued a letter of commitment to your company, which is limited to the property ownership with an area of 2454531 square meters and the value of the land use right with a corresponding area of 55153 square meters in Meiling South Road, Lingyin street, Xihu District, Hangzhou, Provide guarantee for the compensation liability of your company for the principal guarantee of RMB 1.484 billion provided by your company to HNA commercial Holding Co., Ltd. (hereinafter referred to as “HNA commerce”) and HNA Logistics Group Co., Ltd. (hereinafter referred to as “HNA logistics”). Our department is concerned about this. Please verify and explain the following issues:
5. The announcement shows that in view of your company’s provision of guarantee for HNA’s commercial violations, the court ruled that your company should bear 30% joint and several liability for the part of HNA’s commercial repayment of the principal and interest debts of Longjiang bank. According to the reply to the letter of concern to Shenzhen Stock Exchange disclosed by your company on February 19, your company did not withdraw the estimated liabilities for the guarantee matters in the performance forecast of 2021. Please fully explain the main consideration and rationality of the provision of estimated liabilities for the illegal guarantee of HNA commerce and HNA logistics, and whether it complies with the relevant provisions of the accounting standards for business enterprises. The annual audit accountant shall check and give clear opinions.
Company reply:
On April 30, 2021, the company disclosed the existence of related party guarantees that were not disclosed in the non-performing procedures, namely, the company provided 1464 million yuan guarantee for HNA Logistics Group Co., Ltd. (hereinafter referred to as “HNA logistics”) (starting date: December 2018) and the company provided 20105400 yuan guarantee for HNA commercial Holding Co., Ltd. (hereinafter referred to as “HNA commercial”) (starting date: February 2017).
(1) with regard to the company’s guarantee of RMB 201054 million for HNA commerce, the relevant creditors have filed a lawsuit on the business in April 2019 and jointly sued the listed company. The higher people’s Court of Hainan Province made a final judgment in October 2021 and issued the civil judgment (2021) qiongminzhong No. 636, maintaining the judgment of the first people’s Intermediate Court of Hainan Province on the invalidity of the guarantee contract between HNA investment and Longjiang bank, Judgment Hna Investment Group Co.Ltd(000616) is jointly and severally liable for 30% of the principal and interest debts of HNA commercial Holding Co., Ltd. to repay Yichun Xinxing sub branch of Longjiang Bank Co., Ltd. At the time of disclosing the performance forecast for 2021, the company had not received the appraisal and consultation report on the trust property and general trust shares of HNA Group’s bankruptcy reorganization. The amount of the “unliquidated part” in the judgment could not be measured reliably and did not meet the conditions for withdrawing estimated liabilities. In April 2022, the company received the announcement of the court ruling that the reorganization plan of the company’s indirect controlling shareholders and controlling shareholders has been completed. The company has accrued the estimated liabilities of 827215700 yuan and confirmed the accounts receivable from HNA business according to the amount of declared creditor’s rights of 3728716356 yuan confirmed in the reorganization of HNA Group, the evaluation and consultation report on the trust property and common trust shares of HNA Group’s bankruptcy reorganization, etc, At the same time, the estimated credit loss shall be fully accrued for the commercial funds receivable from HNA.
(2) with regard to the company’s provision of 1.464 billion yuan guarantee for HNA Logistics Group Co., Ltd., as of January 29, 2022, the case of the dispute over the guarantee contract between the company and Yichun Xinxing sub branch of Longjiang Bank Co., Ltd. has not been heard yet.; According to Article 16 of the company law of the people’s Republic of China, [company guarantee] the company’s investment in other enterprises or providing guarantee for others shall be decided by the board of directors, the shareholders’ meeting and the shareholders’ general meeting in accordance with the provisions of the articles of Association; if the articles of association stipulates a limit on the total amount of investment or guarantee and the amount of individual investment or guarantee, it shall not exceed the specified limit.
”And Articles 17, 18 and 22 of the minutes of the civil and commercial trial meeting of the national court, and in combination with the relevant facts of the signing of the guarantee contract (without the resolution of the general meeting of shareholders and the board of directors), Longjiang bank is at fault, and the guarantee contract signed by Longjiang bank and HNA investment is an invalid contract. According to Article 7 of the interpretation of the Supreme People’s Court on Several Issues concerning the application of the guarantee law of the people’s Republic of China, “If the main contract is valid but the guarantee contract is invalid and the creditor is not at fault, the guarantor and the debtor shall be jointly and severally liable for the economic losses of the creditor under the main contract; if the creditor and the guarantor are at fault, the part of the guarantor bearing civil liability shall not exceed half of the part that the debtor cannot pay off.” According to the fault of the creditor and the guarantor, the judge has discretion in the part where the guarantor bears civil liability less than 50% of the debtor’s unpaid part, and the court has not issued an effective judgment yet.
According to the relevant judicial precedents of the Supreme Court and the Beijing High Court and the provisions of Article 7 of the interpretation of the Supreme People’s Court on Several Issues concerning the application of the guarantee law of the people’s Republic of China, the legal liability for the invalidity of illegal guarantees of listed companies shall be shared, and the financial institutions shall be determined to bear the main fault liability at their discretion, and the listed companies shall bear the supplementary compensation liability. The company collected relevant cases ① Supreme Court (2020) gaofaminzhong No. 1229 case: dispute over guarantee contract between Hengfeng Yantai Branch, fukong company and Hongda Company. (judgment: it shall be determined as appropriate that fukong company and HTC company shall respectively bear 10% of the compensation liability to Hengfeng Yantai Branch for the failure of the main debtor to pay off part of the debt) ② Beijing High Court (2020) jingminzhong No. 44: dispute over the guarantee contract between Tianma bearing company and Beijing Xinghe Company. (judgment: the court comprehensively analyzes the fault degree of the creditor, debtor and guarantor in the signing of the guarantee contract involved in the case, and decides that Tianma bearing company shall be liable for compensation within 30% of the debts that Beijing Xinghe Company cannot pay off. After Tianma bearing company assumes the liability for compensation, it has the right to recover from Beijing Xinghe Company.) ③ Retrial of the Supreme Court on the series of illegal guarantees of Weilong wine Co., Ltd. (judgment: the court decided that Weilong Grape Wine Co.Ltd(603779) should be liable for 20% of the loss of the principal debtor Xinglong cooperative’s loan to Longkou sub branch of Bank of Yantai Co., Ltd. which could not be repaid) ④ the retrial of the civil application of Fujian Provincial High Court for disputes over guarantee contracts such as Fuzhou Hengyuan Chengshun investment partnership and Oupu Zhiwang Co., Ltd. (judgment: as a listed company, the articles of association and external guarantee of Oupu Zhiwang Co., Ltd. can be inquired through public channels. Fuzhou Hengyuan Chengshun investment partnership, as a professional investment enterprise, fails to fulfill its due obligation of examination, and it shall be found that it knows the fact that the legal representative of Oupu Zhiwang Co., Ltd. guarantees beyond his authority (the guarantee is invalid and AUPU Zhiwang Co., Ltd. shall not bear civil liability after the guarantee is invalid.) In view of the above related cases, the court determined at its discretion whether the listed company needs to bear the compensation liability and the proportion of 0% – 30%, so the company cannot judge the specific amount of estimated liabilities for the illegal provision of guarantee to HNA Logistics Group Co., Ltd.
Therefore, during the performance forecast in 2021, the joint and several liability of HNA investment for guaranteeing the violation of HNA logistics cannot be measured reliably, and the estimated liabilities are not recognized, which is in line with the relevant provisions of the accounting standards for business enterprises.
(3) according to the relevant provisions of accounting standards for Business Enterprises No. 13 – contingencies, “Article 2: contingencies refer to the uncertain events formed by past transactions or events, whose results can only be determined by the occurrence or non occurrence of some future events. Article 4: if the obligations related to contingencies meet the following conditions at the same time, they shall be recognized as estimated liabilities: ① the obligation is the current obligation undertaken by the enterprise; ② the performance of the obligation is likely to lead to the outflow of economic benefits from the enterprise; ③ the amount of the obligation can be estimated Ground measurement. In combination with the progress of the reorganization of HNA commerce and HNA logistics, the amount of the company’s possible payment obligations due to the above guarantee cannot be determined, which does not meet the recognition conditions of estimated liabilities.
To sum up, during the performance forecast of 2021, the amount of the debtor’s inability to pay off is still uncertain, so it does not meet the recognition conditions of estimated liabilities. Therefore, the company has not accrued estimated liabilities for the above guarantee matters, which is in line with the relevant provisions of the accounting standards for business enterprises.
1、 Our main procedures for concerns
1. Understand the situation that no estimated liabilities are accrued for the guarantee matters in the 2021 annual performance forecast disclosed by HNA investment on January 29, 2022;
2. Understand the judgment and relevant basis of HNA investment whether to withdraw estimated liabilities for illegal guarantee matters;
3. Obtain and review the civil judgment ((2021) qiongminzhong No. 636) issued by Hainan Higher People’s court in October 2021 to understand the joint and several liability of HNA investment;
4. Understand the litigation situation of illegal guarantee for HNA logistics;
5. Collect and understand the laws, regulations and precedents related to external guarantee, analyze and judge whether they meet the recognition conditions of estimated liabilities;
6. Inquire about the progress of bankruptcy reorganization of HNA Group as of January 29, 2022;
7. Inquire about the declaration of creditor’s rights of Longjiang bank as of January 29, 2022;
2、 Verification conclusion
As for the illegal guarantee for HNA business, according to the civil judgment ((2021) qiongminzhong No. 636) issued by Hainan Higher People’s court in October 2021, HNA investment shall bear 30% of the unliquidated part of HNA business’s repayment of the principal and interest of the loan of Longjiang bank. As of January 29, 2022, the bankruptcy reorganization of HNA Group has not been completed, and the proportion or amount of “unliquidated part” in the judgment cannot be determined; As for the illegal guarantee for HNA logistics, as of January 29, 2022, HNA investment and Longjiang bank had not been prosecuted and could not confirm their responsibilities. Therefore, during the performance forecast in 2021, the joint and several liability of HNA investment for guaranteeing the violation of HNA commerce and HNA logistics cannot be measured reliably, and the estimated liabilities are not recognized, which is in line with the relevant provisions of the accounting standards for business enterprises.
5. Please explain whether the company should provide guarantee according to the estimated liabilities. 6. If yes, please combine questions 1 and 4, issue the letter of commitment and the time of signing the real estate mortgage contract, and fully demonstrate whether your company has the right and possibility to recover from HNA commerce and HNA logistics after assuming the responsibility of illegal guarantee with respect to the possible illegal guarantee liability, the application of reorganization creditor’s rights by corresponding creditors and the reorganization plan of related parties, Whether your company has the conditions to recognize financial assets on the balance sheet date. If yes, please explain whether the mortgage guarantee provided by Hangzhou yunqi to your company after the balance sheet date may have an impact on the recognition of your company’s financial assets on the balance sheet date and the judgment basis, and whether it complies with the relevant provisions of the accounting standards for business enterprises. Ask lawyers and annual audit accountants to check and express clear opinions.
Company reply:
At present, the company and yunqi are signing the real estate mortgage contract and going through the mortgage procedures according to the commitment letter. After the mortgage guarantee from Hangzhou yunqi to HNA investment is fulfilled, the compensation liability to be borne by HNA investment will eventually be substantially borne within the value of Hangzhou yunqi’s mortgaged assets.
1. Provide the basis for the accounting treatment of the guarantee of RMB 201054 million for HNA commercial control
According to Article 7 of accounting standards for Business Enterprises No. 13 – contingencies: if all or part of the expenses required by the enterprise to pay off the liabilities recognized due to contingencies are expected to be compensated by a third party or other parties, the amount of compensation can only be received when it is basically determined
