Caixin
Feb 28, 2018 05:11 AM
BUSINESS & TECH

Brokerage House Files Lawsuit Against LeEco’s Jia Over Unpaid Loans

Leshi reported a loss of 11.6 billion yuan for 2017, its first annual loss since listing in 2010. Photo: Caixin
Leshi reported a loss of 11.6 billion yuan for 2017, its first annual loss since listing in 2010. Photo: Caixin

A Chinese brokerage house has sued Jia Yueting, founder of debt-ridden LeEco, and three other individuals over unpaid loans worth more than 1 billion yuan ($158 million), adding to a series of lawsuits against the embattled tycoon and his disgraced tech empire.

Xi’an-based Western Securities Co. said Tuesday that it filed the lawsuit against four shareholders and former executives of LeEco’s listed unit, Leshi Internet Information and Technology Corp., for breaking a contract to buy back Leshi shares that were used as collateral for 1.02 billion yuan in loans.

The defendants include Jia Yueting, his brother Jia Yuemin, who is the vice chairman of Leshi, and two former Leshi executives.

Jia Yueting remains the largest shareholder of Shenzhen-listed Leshi with a 25.67% stake, although he stepped down from the company last July amid worsening debt woes. Caixin learned that over 99% of Jia’s holdings in Leshi have been pledged for loans.

LeEco was hit by a capital crunch in late 2016 after years of rapid expansion into businesses including electric cars, smartphones and a video-streaming platform. With its debt crisis escalating, Chinese courts have frozen most assets of LeEco subsidiaries and Jia, who currently resides in the U.S.

This is not the first time that Jia and LeEco have been sued for unpaid loans. Most recently, Orient Securities sued Leshi in early January for failing to buy back 9.69 million of Leshi shares that were used as collateral for 200 million yuan in loans.

Leshi’s shares were suspended from trading from April of last year until January 24. The shares plummeted for 11 consecutive days after it resumed trading, leaving financial institutions holding the shares as collateral with huge potential losses.

On Tuesday, Leshi’s shares closed at 5.44 yuan per share, a loss in value of over 60% since resuming trading.

Leshi reported a loss of 11.6 billion yuan for 2017, its first annual loss since listing in 2010. Annual 2017 revenue declined 66% to 7.46 billion yuan, Leshi said in a Tuesday filing.

Contact reporter Han Wei (weihan@caixin.com)


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