Faraday Future founder files bankruptcy to pay off personal debts

A Faraday Future FF 91 electric car is displayed on stage during an unveiling event at CES in Las Vegas, Nevada January 3, 2017. REUTERS/Steve Marcus

Jia Yueting, an entrepreneur who ran up billions of dollars in personal debts trying to build a business empire in China, has filed for bankruptcy in the U.S. with plans to turn over his latest venture, an electric vehicle startup, to creditors.

In a proposed debt-restructuring plan filed in federal court in Wilmington, Delaware, Jia will use his ownership stake in Los Angeles-based Faraday & Future Inc. to set up a creditor trust to repay his debts.

Jia faces $2.3 billion in claims, according to the plan. In a statement on Faraday’s website, the company said Jia’s debts were owed to creditors in China.

The plan is also designed to help Faraday put together “equity financing efforts and prepare for an IPO,” according to the statement. Depending on the value of that proposed initial public offering, creditors may recover from 49% to 100% of what they are owed, according to reorganization plan documents filed in court.

Faraday is trying to develop an electric vehicle for sale in the U.S. and China. The company recently hired Carsten Breitfeld, BMW AG veteran, to take over the chief executive officer role from Jia.

Faraday won a much-needed cash infusion when it formed a joint venture earlier this year with The9 Ltd., the Chinese online-gaming company. And a unit of China Evergrande Group, the property developer owned by Hui Ka Yan, China’s third-richest man, agreed to invest $2 billion but cut back on the investment after giving Faraday $800 million for a 32% stake, according to court documents.

Jia has a history of making dramatic statements about his various ventures, including a claim that one of his biggest China-based businesses would “far surpass” China’s three biggest internet companies: Baidu Inc., Alibaba Group Holding Ltd. and Tencent. That claim was related to $2.2 billion Jia raised for LeEco, a sprawling conglomerate with interests ranging from electric cars and TVs to entertainment.

In his first international television appearance in 2016, he called Apple Inc. “outdated” and said he expected his electric vehicle company to “lead the industry leapfrogging to a new age.”

In his bankruptcy filing, Jia warned that his IPO plans for Faraday may not raise as much as projected. That was due in part to “negative press related to his debts and an investigation by the China Securities Regulatory Commission into the delisting from the Shenzhen Stock Exchange” of a company where Jia served as chief executive officer.

Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.