Under the American legal framework, there are two ways: Chapter 7 and Chapter 11. Chapter 11, the bankruptcy restructuring applied by Jia Yueting, refers to the situation that the enterprise or individual is insolvent at present, and the law allows the debtor to propose a restructuring plan to the creditors to defer repayment in a way of asset protection.
Financial Weekly (ID: cjtxzk)
Wen Han Han Jiang
Long Way to Pay the Debt
Under the legal framework of the United States, there are two ways: Chapter 7 and Chapter 11. Chapter 11, the bankruptcy restructuring applied by Jia Yueting, refers to the situation that the enterprise or individual is insolvent at present, and the law allows the debtor to propose a restructuring plan to the creditors to defer repayment in a way of asset protection.
People familiar with the situation told the media that this approach is extremely unfair to the vast majority of creditors, other creditors are not even able to get repayment opportunities, and all creditors hope to maximize the value of assets after FF success and get full debt repayment.
According to the publication information of China Executive Information Open Network, from 2017 to April 2019, there were 31 pieces of executive information under Jia Yuetings name, the total amount of which was 11.5 billion yuan. As of June 30, 2019, the balance of arrears owed by major shareholder Jia Yueting and his actual controlling enterprises to the merger scope of listed companies was about 1.985 billion yuan, according to the semi-annual report of Le Video Network, which suspended listing on May 11. Even when Sun Hongbin generously donated 15 billion yuan, the data showed that Jia Yueting still owed 10 billion yuan to suppliers and financial institutions.
In September, Jia resigned as chief product and user officer of FF. The CEO was replaced by Bi Fukang, who was two senior executives of the new automobile industry. Jia sent a message on Weibo that I gave up everything just to make FF, pay off the remaining guaranteed debts as soon as possible, and realize the dream of transforming the automobile industry.
In the name of cheaters, Jia Yueting has always shown a good image of trying to pay off debts. In June 2017, Jia Yueting sold about 67% of his accessible equity to repay the debt owed to his capital. Most of the debt was traded in the form of debt, which allowed Jia Yueting to repay nearly 3.3 billion yuan of debt.
On August 29, FF said in a statement that Jia Yueting had repaid more than 20 billion yuan of domestic debt in the past two years. Jia Yueting also set up a personal debt repayment trust fund to repay domestic debt, which is mainly provided by the FF shares held by Jia Yueting. For the remaining debt, Jia Yueting said in an interview that he was willing to repay the proceeds of FF held by individuals after the U.S. IPO listing.
On October 11, according to the Beijing Court Trial Information Network, the court recently terminated the execution procedure of Peoples Livelihood Trust v. Lexus Holdings and Jia Yueting. The court disposed of 29.78 million shares of Lexus Holdings held by Jia Yueting. The proceeds from the above-mentioned stocks and the deduction of capital account under Jia Yuetings name totaled 73.037 million yuan, which has been repaid to Peoples Livelihood Trust, but there are still about 400 million yuan in arrears. Recover.
According to a court document obtained by Caijing Tianxia weekly, Shanghai lancai, an asset management company, lent a loan of 50 million yuan (about 7 million US dollars) to LETV at the end of 2016. LETV and Jia Yueting failed to repay the loan. In 2018, SCL sued Jia Yueting in the United States and froze his 33% equity in FF. And temporary protection orders for millions of dollars worth of luxury homes owned by a shell company in California. In April 2019, the court ruled that Jia Yueting should repay the arrears of blue color plus interest totaling 12.41 million US dollars, but Jia Yueting did not repay the arrears.
Therefore, SLC can be frightened to see the news that Jia Yueting is going to give way in advance. Court documents show that on August 29 this year, in order to prevent Jia Yuetang from fleeing, Blue Cai applied to the court for a temporary restraint order against Jia Yuetang, forbidding him to transfer or conceal any Non-exempted assets by way of personal or instructional others, which was approved by the court.
Also winning is an investment partnership called Shanghai Qichengyueming. In May 2018, the China International Economic and Trade Arbitration Commission (CIETAC) ruled that Jia Yuetang lost the lawsuit and paid $100 million in arrears to the departure Yueming. After Jia Yuetang fled to the United States to build a car, the arbitration case was continued by the California Court of Justice of the United States.
On July 11, this year, the court asked Jia Yuetang to pay all the payables specified in the CIETAC ruling on the departure of Yueming, plus an annual interest rate of 4.35%. Even if we win the lawsuit, its obviously another victory in which we cant see the spoils of war.
From July 6, 2017, when he resigned as chairman of Le Video Network, Jia Yueting has stayed in the United States for 827 days.
After selling Le-TV to Sun Hongbin, Jia Yuetang, who traveled to the United States with his dream of car-making, did not bring the good news expected by the public. What awaited Jia Yuetang was that he struggled to survive in the search for financing, and that FF91 broke its promise of mass production. He also experienced a life-and-death test from suffocation to breathing.
On January 18, 2017, after the announcement of the first production vehicle FF91, Faraday announced that the first phase of its plant project in APEX Park, Nevada, USA was completed and that the first batch of FF91 would be officially delivered in 2018. But in the 997 days after its release, the production process of FF91 was extremely slow.
In 2018, Xu Jiayins entry was a great driving force for Jia Yueting to realize his dream of car building. In June, Hengda Health announced that it would acquire 100% of Shiyings shares for about HK$6.747 billion, indirectly obtaining 45% of SmartKings shares, becoming the companys largest shareholder, while SmartKing owns FF America and FF Hong Kong wholly.
However, with the deepening of cooperation, Hengdas intention to gain control of FF began to emerge. After injecting $800 million into FF, Evergrande was reluctant to continue paying the remaining $1.2 billion and used the original agreement to block FFs outward financing. On the last day of 2018, Jia Yueting and Xu Jiayin tore their faces thoroughly. In order to alleviate the problem of financial constraints, Jia Yueting also began to cut staff and salaries drastically within the company.
According to TheVerge, in March, several suppliers and contractors filed 11 new lawsuits against FF, filing a total of $80 million in arrears and claims. To get cash flow, FF sold its headquarters in Los Angeles and its land in Nevada Industrial Park for $40 million, which is still insufficient to support these debts and FFs next research and development.
More importantly, two of the three co-founders retired one after another, leaving FF with only Jia Yueting as a light rod commander. During this period, from Tesla to Weilai, Xiaopeng and Weima, Chinas new car market competition has been a close battle.
On March 25 this year, in a multi-pronged manner, Faraday announced the signing of an agreement with the Ninth City in the future. Both sides set up a joint venture company for electric vehicles. The ninth city will inject 600 million US dollars into the joint venture company by stages according to the contract agreement.
Bifukang, who was in charge of two new forcescar-building, was regarded as the Savior of FF by the outside world. In an interview with the media in September this year, Bifukang revealed that FF still has enough funds to maintain its operation for several months. It has raised some funds through mortgage loans and is promoting equity financing. Since I came to FF, many investors have come to contact me actively, and the situation has changed a lot. A great part of my job now is to get in touch with different investors who are interested in it. I believe we will solve the problem of capital. He said.
FF said in September that the company expects to achieve volume delivery within nine months of successful financing and IPO within 12 to 15 months of completion of financing. In addition, FF reduced the amount of funds required for its current phase to $850 million.
But whether these promises can really be achieved or not, we have to ask a question mark first.
Source: Qiao Junyi_NBJ11279, Responsible Editor of Finance and Economics Weekly