Chinese airline-to-finance conglomerate HNA Group faces the loss of assets including buildings at London’s Canary Wharf to creditors, after a missed interest payment that marks its first default on international liabilities.

CWT International, a Hong Kong-listed subsidiary of cash-strapped HNA, said in a statement on Tuesday that it had failed to pay interest payments and fees on a HK$1.4bn ($179m) loan, prompting lenders to demand the subsidiary repay the full loan and interest or risk the loss of almost all of its remaining assets.

The missed payment also triggered a cross-default on a separate HK$766m loan owed by a subsidiary of CWT.

Bankers and lawyers have long expressed concern that HNA’s complex financing structure and pledges across subsidiaries leave it vulnerable to a chain of defaults.

HNA has navigated a series of liquidity crises as it tries to pay off at least $80bn in debt. So far, it has taken pains to meet any international obligations, while defaulting on products sold to individual Chinese investors and employees, and narrowly succeeding in paying off some domestic bonds.

Creditors are seeking assets including the Canary Wharf office buildings, golf courses in China and investment properties in the US, after CWT failed to pay interest and fees of approximately HK$63m that is due to lenders under the HK$1.4bn facility agreement.

In the past two years HNA has sold more than $40bn in assets to trim a debt pile twice that size. However, the more it sells, the fewer revenue-producing assets remain to settle outstanding loans.

Brexit uncertainties have meant HNA has had “a challenge identifying interested buyers” for the Canary Wharf buildings at 17 Columbus Courtyard and 30 South Colonnade, the company said in March. They are occupied by Credit Suisse and by Reuters, which plans to move out next year.

CWT said its lenders would take possession of all assets pledged as collateral if the company does not repay the outstanding amount by 9am Hong Kong on Wednesday. The subsidiary said the assets represent the “vast majority” of its total holdings, which it said were valued at HK$24.6bn at the end of 2018.

CWT, which was formerly known as HNA International Investment Holdings, last year sold warehouse properties in Singapore for $539m. It acquired the warehouses in 2017 when it bought CWT International, a Singaporean logistics company whose name it subsequently adopted. Trading in its Hong Kong-listed shares has been suspended since April 10.

According to its 2018 financial statement, the company borrowed $561m in 2017 to buy CWT, which it paid down thanks to the warehouse sale and a HK$1.4bn loan due in October this year. It said it would not be able to repay the HK$1.4bn unless it was able to refinance it.

Separately, Hong Kong regulators on Tuesday asked for “further clarification” on the financial situation of HNA-controlled Hong Kong Airlines, whose creditors have taken the company to court.

Last month, HNA sold budget carrier HK Express to Cathay Pacific, carving the more profitable business out of Hong Kong Airlines. The airline told Hong Kong’s Air Transport Licensing Authority it had made partial repayments to creditors over claims made in court at the end of February.

Additional reporting by Archie Zhang in Beijing

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