By YANG Xia

Tempus Global (Tempus), a Chinese travel conglomerate, is in deep crisis. The publicly-listed company operates an expansive travel planning business and was once hailed as "the leader of China's travel service." 

Last year, the company found itself suffering severe liquidity problems and the COVID-19 pandemic has pushed it into even deeper water.

China CITIC Bank (CITIC), a creditor of Tempus, has begun involuntary bankruptcy proceedings against the group, according to a statement from Tempus on April 21. In July 2018, Tempus took out a two-year, 300-million-yuan (US$42 million) credit facility with CITIC. That amount has since been issued in 14 separate loans, for which almost nothing has been repaid.

As China's bankruptcy law allows, Tempus put forward objections when the proceedings were initiated, a restriction to the abuse of involuntary bankruptcy by creditors. The court has is yet to accept the case and set the bankruptcy in motion.

Regardless of the decision, Tempus seems to have passed the point of redemption. Even before the court comes to its decision, CITIC can freeze Tempus' bank accounts, or even liquidate its assets through arbitration or litigation, which would put paid to much of Tempus' operations. And if CITIC's case is accepted, Tempus may be forced into bankruptcy anyway, and consequently delisted from the Shenzhen Stock Exchange.

Tempus continues its daily operations, according to the April 21 statement, but its troubles go far beyond the current antagonism with CITIC. The company has been suffering from massive losses, owes a large number of unpaid salaries, and has lost control of its subsidiaries.

The pandemic and resultant economic havoc it caused have withered Tempus. Its income in the first quarter of 2020 dropped significantly, a loss estimated to be between 650 million and 700 million yuan.

Executives are leaving en masse. On April 20, Vice-chair Zhai Hao resigned "for personal reasons." The treasurer's seat has been vacant since April 2018, and the Chairman has been acting secretary of board since October 2019 after the former secretary resigned.

To some extent, the liquidity problem Tempus has been suffering since the second half of 2019 has been both cause and symptom of its distress. Its operations have been handicapped by a severe shortage of working capital, which in turn has triggered asset freezes and further sanctions. As a result, the company has delayed salary payments. As of April 22, unpaid salaries and severance payments amounted to 128 million yuan. 

In the chaos, Xiyou Travel, a subsidiary of whom Tempus owns 79 percent, has refused to cooperate with the parent company's annual audit, which, together with the lockdown, has delayed Tempus' 2019 financial statement, causing a 420 million yuan write-down of goodwill on the books. 

Regardless of the audit results, stormy seas lie ahead for the besieged travel conglomerate.