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LeEco chairman's frozen bank accounts only add to the company's sad state of affairs
A little over a year ago, Chinese company LeEco entered the U.S. with a weird cocktail of optimism that some might call brash and a slew of products that tried to undercut the competition. Unfortunately for LeEco, that cocktail was created on the tabletop of significant amounts of borrowed money that have yet to be repaid.
This is the latest in LeEco’s financial woes, which started when the company amassed $6 billion in borrowed money. That money was to be used to fund LeEco’s U.S expansion in 2016, but according to company founder and chairman Jia Yueting during an investor meeting, there were mistakes made when allocating the funds:
The cash problems at the nonpublicly traded businesses are more serious than when this crisis erupted. Our businesses are constantly using cash to repay loans, having a huge impact on their operations.
As a result of the mistakes and unpaid loan payments, the Shanghai High People’s Court froze $182 million in assets that were linked to Yueting, his wife, and three other LeEco affiliates. A company spokesperson confirmed the court’s ruling, but said that there is enough to cover the debt and that LeEco will work with China Merchants Bank on repayment.
This is only the latest in a depressing string of salvos during the last year, which has seen LeEco experience low U.S. revenue, hemorrhage money, sell its swanky U.S. head office, unable to pay its U.S. staff, and issue significant layoffs for its U.S. workforce. Even though LeEco wants to move forward in the U.S., it feels like the company is walking through quicksand while its competitors are already on paved road.