File photo taken on March 27, 2009 shows a jumbo jet of the Dongxing Group Co. Ltd lying on the tarmac at the Tianhe International Airport in Wuhan, central China's Hubei Province. The Wuhan Intermediate People's Court meted out a verdict to announce the bankruptcy of the Dongxing Group Co. Ltd in Hubei Province, the fourth private air company that the China's air service regulator has approved, on account of huge deficits and insolvency and jeopardy on flight security, on August 26, 2009. [Xinhua]

East Star Airlines, the debt-laden private airline based in central China's Wuhan City, officially went bankrupt after its restructuring application was rejected Thursday.

The Intermediate People's Court in Wuhan City said the plan submitted by the East Star Group and ChinaEquity was unfeasible and failed to meet the conditions for a legal restructuring.

ChinaEquity, an investment company founded in 1999 in Beijing, had promised to invest 200 million to 300 million yuan (US$29-44 million) for the restructuring plan.

File photo taken on May 19, 2006 shows the aircrew boarding on the Airbus 319 jumbo jet of the Dongxing Group Co. Ltd for its maiden flight at the Tianhe International Airport in Wuhan, central China's Hubei Province. [Xinhua]

However, it did not specify the source of the funding and failed to provide certificates and documents, and lacked measures to protect creditors, the court said.

The court said East Star Airlines had no operating income in 2008, while ChinaEquity recorded 470,000 yuan in main business income and a 187,477-yuan deficit last year.

The East Star Group and ChinaEquity agreed the restructuring plan earlier this month. The Intermediate People's Court in Wuhan heard the plan Tuesday.

East Star was founded in May 2005, making it China's fourth private carrier after Okay Airways, United Eagle Airlines and Spring Airlines. It operated more than 20 domestic passenger routes between key cities and held about 10 percent of the market share in Wuhan.

The airline, with a registered capital of 80 million yuan, was jointly owned by a tourist agency, a tourist investment company and a real estate firm, which all belonged to the East Star Group.

Its operations were suspended by the industry regulator as of March 15, due to prolonged financial and management problems.

The order was issued by General Administration of Civil Aviation of China (CAAC)'s branch in charge of the country's central and southern areas after the Wuhan government submitted an application for the suspension.

The bankruptcy proceedings were launched on March 30 at the request of six creditors, according to the Communications Commission of Wuhan City.

East Star Airlines announced last month that its total debt surpassed 752 million yuan.

(Xinhua News Agency August 28, 2009)