A report surfaced yesterday, claiming that the China Merchants Bank requested authorities to freeze some of LeEco’s assets, well, that has just happened. According to a report by The New York Times, a court in Shanghai has frozen $182 million in assets, now, this is all tied to LeEco’s chairman it seems, Mr. Jia Yueting, his family and LeEco’s affiliates. Parts of the court’s latest actions is actually tied to Mr. Yueting’s personal assets, which is a rather hard blow for LeEco’s chairman.
This action was taken by the Shanghai High People’s Court, and the ruling took place last week, but was not made public until now. According to the provided info, the court froze assets which belong to Mr. Yueting, his wife, and 3 further LeEco affiliates, following a missed loan repayment. LeEco’s spokesperson confirmed the news, and the company’s Vice President for Finance, Nie Chengzhi, also had something to say. He said that he’s hopeful or reaching an agreement with the China Merchants Bank, as he’s currently negotiating. This does not exactly come as a surprise, considering that we’ve been hearing about LeEco’s financial struggles for quite some time now. The company embarked on a rather interesting journey by expanding to the US, and it seems like they overexpanded in the process. LeEco wanted to do too much, too fast, and it seems like it’s taking its toll now.
Now, in order to fund such expansions plans, and all the side projects of the company, LeEco borrowed quite a bit of money since the start of 2016, the company brought in at least $6 billion in financing, but it seems like LeEco was not able to fulfill its promise and repay that debt. Mr. Yueting admitted that the company is having financial issues last Autumn, and the details had started coming out last week. LeEco had started selling assets in order to raise cash, its ride-sharing affiliate, Yidao Yongche, announced a change in control last week, after the company failed to pay wages to the company’s drivers. Now, the China Merchants Bank financed LeEco back in 2015, and has helped the company to purchase an 18 percent stake in Coolpad Group, and it seems like LeEco read the market wrong at the time, as the competition is fierce, and Coolpad’s shares dropped this year. LeEco has some tough decisions to make, and it remains to be seen what will happen next.