Jia Yueting, the colorful Chinese entrepreneur who founded the LeEco electronics-to-video streaming group, has filed for bankruptcy in the U.S.
Jia, sometimes known as YT, has debts on both sides of the Pacific and has been in the U.S. from late 2017, in defiance of an order from the China Securities Regulatory Commission to return home. Jia argued that he needed to stay in order to sort out problems at Faraday Future, the electric car company he also founded. But as a result of his defiance, Jia was placed on China’s blacklist of notorious debtors.
A statement posted on Sunday by Faraday Future said that Jia had “filed for bankruptcy and restructuring under Chapter 11 in the United States” and that “this was done to address his personal debts in China.“ A further notice by Faraday said Jia made the filing “in an effort to keep his promise to perform all of his obligations to the creditors and completely pay off his personal debts in a way that is considered fair and efficient and would offer each creditor an equal opportunity to be paid off.”
The notice said that a creditor trust for the benefit of Jia’s creditors would be established. It explained that Jia will lose control of his shareholding in Faraday Future – believed to be about 33% – although he will remain an executive at the company, as its chief product and user officer.
The notice also accused unnamed creditors in China of causing the collapse of LeEco. “Since certain creditor[s] froze all the assets and operating accounts of YT and LeEco group (which are worth substantially greater than the default amount) that directly caused a halt to the ordinary operation of LeEco group and led to its collapse.” The notice added that, “as of today, YT has repaid over US$3 billion worth of debts, with unpaid amount of around $3.6 billion.”
Jia’s net debt “is around US$2 billion, after deducting the value of the assets that are frozen but yet to be disposed in China and the guarantees for certain convertible loans,” the notice said.
Faraday Future was previously a major component supplier to and sponsor of Dragon Racing, the car racing team owned by Jay Penske, the owner of Variety’s parent company, Penske Media Corp.