Jia Yuetings personal bankruptcy was almost exposed and he was nearly invested by local tyrants in the Middle East

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 Jia Yuetings personal bankruptcy was almost exposed and he was nearly invested by local tyrants in the Middle East


Jias lawyer, speaking at the hearing, did not specify which Middle East sovereign wealth fund was interested in its investment, and a spokesman for Faradays future declined to comment. Saudi public investment funds already hold a majority stake in another electric car start-up, lucidmotors, while the UAE and Kuwait have even larger sovereign funds. John Schilling, Faradays future communications director, declined to comment, saying this is confidential information about investor discussions.

But no matter who the investors are, the Middle Easts interest in Faradays future is only one of the many facts exposed during Jia Yuetings bankruptcy. Jia Yuetings bankruptcy process lasted seven months until it was approved by many creditors and the court in May this year. Here are some important details of the bankruptcy Insider:

1. Jia Yueting told creditors that Faradays future attracted a lot of peoples interest

Although Faraday faces many problems in the future, including a large number of talent being poached by competitors, the company insists that the patented technology developed for ff91 electric SUV since 2014 is of great value. The company also said that once the financial problems and Jia Yuetings bankruptcy were resolved, investors or partners would rush in. Although Jia Yuetings bankruptcy did hinder the deal, he told creditors in April that Faradays future had finally aroused the interest of many investors.

According to a statement, Jia Yuetings lawyer team told creditors that Faraday is negotiating investment intentions with several potential investors in the Middle East in the future, and that the company is also working with more than 20 potential debt investors to provide short-term financing and even is striving to apply for US government loans. His team of lawyers also said that Faraday was in the process of negotiating with the governments of three Chinese provincial capitals on the establishment of headquarters and that the company was in close communication with two major Chinese OEMs on cooperation matters.

It is not surprising that Faraday is likely to attract more investor interest in the future. It was reported later last year that the company had held talks with Fiat Chrysler. Electric car companies are once again hot targets for investment deals of all sizes, such as rivian continuing to raise a lot of money, and Nikola, a zero emission trucking company, recently raised hundreds of millions of dollars in a reverse merger with Fisker. Many electric car companies are lining up to go public, and even karma Automotive has secured $100 million in financing.

I can say for sure that as Faraday continues to move towards the delivery of the ff91 in the future, we are in discussions with different organizations, the nature and extent of the discussions are confidential, so I cant disclose any further details, Schilling said

2. Faraday will provide a multi million dollar house for its new CEO in Los Angeles

In an interview last year, breifeld said he told Jia that he would only choose to join Faraday when he was appointed the future chief executive of Faraday. But in exchange, breifeld got more than the title, because according to the bankruptcy case, breifeld now lives in a multi million dollar home owned by Jia Yuetings partners.

However, it is not clear which house it is. Part of breifelds acceptance of the CEO position was that he would live in one of Marguerite properties, Jias lawyer said He was referring to the multi million dollar waterfront mansion on Margaret Avenue in Rancho Palos Verdes. Jia has used these mansions to house Faradays future executives, hold parties and act as collateral for loans when money is tight. But breifeld recently tweeted a photo of Deng Chaoying, the future vice president of Faraday, outside a $2 million mansion inland.

In an email, Schilling said that breifeld lived in a property that Faraday would rent, which is available to executives as part of their relocation benefits. Breifeld, who previously lived in Silicon Valley and traveled to Germany and China during his work for byton, said last year that he moved to Los Angeles to facilitate his future work in Faraday.

He said: I destroyed all the back roads, left my home in Munich, everything I had in the world, my son and I moved here, and now I live here. Its much better than silicon valley. In Silicon Valley, if you like technology, you will meet a lot of technicians, which is very exciting. But from a life point of view, its just boring. Its very close to the sea. I like the sea very much and the quality of life is much better.

3. Faraday helped finance Jia Yuetings bankruptcy in the future

Faraday has been in a state of shortage of funds for most of its existence in the future. But since the company parted ways with China Evergrande, a major investor, in 2018, funds have been particularly tight. This split led to hundreds of layoffs and unpaid leave, which eventually became so bad that Faraday would sell its headquarters in 2019 to get some cash.

However, Jias bankruptcy was funded by Pacific Technology, one of Faradays future major holding companies. At the beginning of the process, he borrowed $2.7 million from Pacific technologies, and at the end of the case earlier this year, he borrowed a total of $6.4 million in debtor in possession loans from Pacific technologies.

Jias lawyer initially said that this was because Faraday future provided the most tolerant loan terms. In other words, unsurprisingly, other lending institutions want better protection or more return on lending to a person with billions of dollars in personal debt. But they finally admitted that Jia Yueting had no way to go.

Ultimately, Pacific technologies is the only entity willing to finance the debtor under Chapter 11 of the bankruptcy code, they wrote Jias lawyer claimed that all this was aboveboard, and the creditor Committee helped negotiate the terms. The money also comes not directly from Faradays near depleted coffers, but from personal donations from members of Faradays future global partners executive management team.

One of the main reasons Faraday has been able to survive for so long in the future is that in early 2019, it began working with Jack Butler, the bankruptcy legend, whose company birchlake provided the start-up with loans and helped it find funds.

The disadvantage of this is that, according to Jia Yuetings bankruptcy application, most of Faradays tangible and intangible assets in the future have become collateral. That means the start-up may have more difficulty getting new loans, risking losing those assets if it doesnt pay back the debts it has been carrying. In fact, Faraday will have to apply for a $45 million loan extension from birchlake, which matures in October 2019.

Faradays future recently said it had paid off the loan. Birchlake has released control of Faradays future intellectual property, according to documents filed with the California Secretary of state and the U.S. patent and Trademark Office. However, interest on the companys mortgage has been transferred to royod, a California limited liability company. Mr. Schilling said it was a current lender, but there was little more information about the owners behind the scenes. The address given by royod in his filing with the patent office was just a post office box in Santa Monica. Documents submitted to the Secretary of state show that the company is run by a man named Kaidong, who appears to have been Faradays future administrative assistant.

As of the end of July 2019, Faraday will have to continue borrowing money in the future, because there is only $6.8 million in cash in the companys account (the latest data shared in Jia Yuetings bankruptcy petition), while about $2 billion invested by Jia Yueting and Evergrande in the past few years has been used up. In December, a lawyer for Jia told the judge that he didnt believe the start-up had enough capital to run for 60 days and that the company would basically run out of cash.. Its global partners had to borrow $16.5 million from Faraday in June 2019 to support its day-to-day operations. In April, the start-up also received $9.1 million in loans from PPP projects related to the new outbreak.

With Jias bankruptcy approved, Faraday says it can now again attract investment in the name of the final launch of a luxury electric SUV. But even in a market where electric car start-ups suddenly get funding, Faraday still has a long way to go. Breifeld has said that Faraday will need $850 million to go into production in the future. Court documents show that according to Jia Yuetings bankruptcy, the start-up has been striving for a loan of $170 million recently to maintain its operation and construction.

If Faraday succeeds in raising new capital and putting it into production in the future, Jia Yuetings creditors will certainly benefit now, because when they approved his bankruptcy plan, they agreed to exchange their creditors rights for shares in a trust company, and the trust company would pay them fees if the start-up was listed or sold. In a letter published last month, Jia Yueting, a former salesman, saw many of his troubles as a positive factor. I firmly believe that past successes and failures will be valuable lessons for Faradays future success, he wrote. Ive learned a lot from past mistakes and I hope I wont repeat them. (small)

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