LeEco’s founder Jia Yueting has been ordered to return to China by China Securities Regulatory Commission before December 31, 2017, and deal with the company’s debts. It is yet another huge problem to be faced by the founder of indebted tech conglomerate LeEco.
A public letter published by the Beijing branch of China Securities Regulatory Commission described LeEco’s failure to repay its debts as “a serious violation of the legitimate rights and interests of listed companies and the vital interests of investors.”
CSRC has ordered former LeEco CEO Jia Yueting to return to the country by the end of this year in order to fulfill his obligation and protect investors’ rights. Earlier this month, China has officially added Jia Yueting to the list of debt defaulters after he failed to repay over $71 million (470 million Chinese yuan) to Ping An Securities Group.
Leshi Internet Information and Technology Corp. is the parent company of LeEco brand which was founded in 2004 as a video streaming service. It then expanded into multiple sectors including the making of electronic products and electric vehicles which sparked a major requirement of cash to fund company’s ventures. LeEco, in order to keep running, borrowed billions of dollars from multiple investors with Jia using his own shares in his parent company as collateral to secure funds from securities brokerages.
LeEco launched smart bikes, smartphones, and other consumer electronic products in different parts of the world. The expansion plan also included an agreement to partner with electric vehicle startup Faraday Future which the company successfully executed, however, the deal to acquire American TV company named Vizio for $2 billion was called off.
LeEco failed to accomplish its goals and a pile of debt from lenders mounted which led to multiple defaults. Under a lot of pressure from investors, Jia Yueting stepped down as CEO of Leshi Internet in May after promising on social media platforms to repay the company’s debts.
According to the letter posted by CSRC, the bureau has already sent a letter on September 13 asking Jia to immediately return to China. And now the securities regulator again ordered Jia to return to China to “effectively fulfill the obligations of the actual controller of the Company, cooperate with the Company to solve the problems of the Company, properly handle the risks of the Company and earnestly protect the legitimate rights and interests of investors.”