Compiled by Caijing staff

(Caijing.com.cn) Debt-ridden private carrier East Star Airlines Co., which Air China had once sought to acquire, will receive 500 million yuan in new funding from a private investor to avoid final liquidation, the 21st Century Business Herald reported.

Shanghai YuField Industrial Co., a little-known private company, will invest the money in two phases for a stake of at least 85 percent in East Star, the carrier's major shareholding company East Star International Travel Agency told a media briefing on June 22.

Shanghai YuField will also bring in other investors, the newspaper said citing Wu Yue, a lawyer representing the company. Wu declined to disclose the names of other investors.

Lan Shili, who owns the airline through three companies he controls, will see his holding in the carrier reduced to no more than 15 percent upon completion of the deal, the newspaper said.

East Star Airlines, with 500 million yuan in debt, began bankruptcy proceedings after a local court accepted GE Commercial Aviation Services' lawsuit against the airline on March 30. East Star Airlines owes GECAS and its six affiliates more than 74 million yuan. 

The Civil Aviation Administration of China suspended East Star's flights on March 15 at the request of the government of Wuhan, East Star's headquarters.
 
Air China parent China National Aviation Holding Co sought to take over East Star earlier this year, but East Star refused the deal at the last minute, citing "cultural differences" with the larger airline that might slow decision-making. 

A senior Hubei province official confirmed to Caijing in April that Lan Shili is under house arrest as he posed a flight risk. 

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