Court freezes LeEco assets over late debt payments

Bloomberg

LeEco is trying to resolve a dispute with one of China’s largest banks over unpaid interest on debt, a spat that’s prompted a Shanghai court to freeze 1.24 billion yuan ($182 million) of assets held by the tech conglomerate and its billionaire founder Jia Yueting.
The ailing firm’s disagreement with China Merchants Bank Co. arose over loans to a smartphone subsidiary called Leview Mobile, both companies said separately on Tuesday. That unit ignored several requests for interest payments, the lender said. It eventually went to a court in Shanghai, which then ordered the freeze on assets held by three LeEco affiliates, Jia and his wife, according to the Xinhua News Agency.
LeEco is now in negotiations with its creditor and has enough capital to service its debt, the company said in an emailed statement. Merchants Bank said the court’s decision had since brought business risks under control, without elaborating.
“The bank does not rule out the possibility of solving this issue through friendly negotiations with LeEco,” it said in an emailed statement provided by a representative.
Jia is fighting to revitalize a conglomerate he once portrayed as superior to Tesla Inc. and Apple Inc., but is now grappling with a cash squeeze after expensive forays into cars and smartphones. It’s been forced to slash costs and employees and has mentioned plans to sell assets to address the crunch. The entrepreneur told shareholders last week the cash shortage afflicting LeEco had worsened in past months.
The Shanghai court’s freeze took effect June 29 and will last three years till June 2020, Xinhua cited the court document as saying.
LeEco has been trying to come to terms with a larger than anticipated debt burden. Jia expected 9 billion yuan to be enough to solve its funding issues last year and managed to raise 9.7 billion yuan, he told shareholders in a transcript supplied by LeEco. Instead, he and the company jointly paid off about 15 billion yuan in debt that year.