Shanghai: Assets linked to Chinese tech giant LeEco have been frozen in a dispute with a creditor, a unit of the troubled company has confirmed, highlighting its perilous financial state. Chinese financial magazine Caixin first reported Monday that a Shanghai court had ordered the freezing of 1.237bn yuan in assets connected to LeEco, its subsidiaries, and billionaire founder Jia Yueting.
The court ruling was in response to legal action brought by China Merchants Bank over unpaid loans to a LeEco smartphone unit, Leview Mobile. LeEco was founded in 2004 by Jia to provide online video streaming but has since launched aggressive forays into self-driving cars, smartphones, film-making, and sports broadcasting rights that have plunged it into a cash crunch.
In a statement late Tuesday to the Shenzhen stock exchange, Leshi Internet Information and Technology Corporation a listed LeEco subsidiary said 519 million of its shares owned by Jia, which were used as collateral in the loans, had been frozen by the court. The statement did not refer to the apparently separate assets mentioned by Caixin.
Adding to LeEco’s woes, debt collectors from 19 firms including some of its suppliers have gathered at the company’s Beijing headquarters for the past two days to demand money they claim they are owed, the National Business Daily reported.
Sometimes referred to as a combination of Netflix, Apple, Amazon and Tesla, LeEco last year announced bold plans to break into the US market, but has since throttled back following a series of setbacks. In a letter to employees in December, Jia admitted the firm was cash-strapped and had blindly sped ahead with expansion.
In January, it secured a $2.2 bn investment lifeline from a group led by property developer Sunac China Holdings. But a month later the Asian Football Confederation said it had terminated a $100m contract with subsidiary LeSports to broadcast AFC games in China after reports of payment defaults.
