A plan reorganized by Jia Yueting, the founder of EV startup Faraday Future, in trouble seven months after filing for Chapter 11 bankruptcy to deal with $ 1.1 billion in personal debt Approved.
In overly simple terms, the majority of the people and companies he owed for due to the collapse of LeEco have agreed to exchange debt claims by overly-strengthened technology groups that have built up their wealth in China. Ownership stake. They had a total opportunity only if the currently struggling startup successfully completed listing on a major stock exchange.
Faraday Future, founded in 2014, has spent more than $ 1.7 billion (about $ 900 million is Jia & # 39; s)), yet it is still manufacturing its first vehicle, a luxury SUV that is still filled with a screen called FF91. Did not start. Instead, startups are more famous for the fossils associated with Jia's tendency to bombing and his financial mismanagement. The Verge has written in recent years. To start production of the FF91, the company needs $ 800 million in its own position.
Gia argued in court that the extended uncertainty about his personal debt would hold Faraday Future's potential funds. dental. And the idea was to replace the debt owner's claim with the startup's stake, so it was their interest to approve his plan as soon as possible. In December of last year, in fact, one of Jia's lawyers told the court that Faraday Future had no financial basis to do more financially, according to the judge. At that time, the lawyer said, "Faraday will basically run out of cash."
Faraday Future Former managing director Verge said last year that this "was thought to be a gun to the creditor's head." . Lawyers at some companies Jia owe millions to make similar claims that ultimately were unsuccessful in court.
Fraday Future has not yet run out of cash thanks to a series of loans from restructuring companies that have been working since early 2019. Faraday Future said it recently received a $ 9 million loan as part of the government. The plague-related “Paycheck Protection Program.”
Jia's creditors had few options other than agreeing to their plans, as they had few personal assets to cover the $ 3.6 billion hole they had unearthed. Jia said in 2017 that he had bought millions of dollars of coastal mansions and land in Los Angeles (to avoid pressure from the Chinese government on exports) before expelling himself to the United States, but said he had sold his real assets to the courts. Ownership of the property. Even if true, the total value is only tens of millions of dollars.
Jia's bank account is also relatively empty according to the documents filed with the court. In fact, he chose Faraday Future for cash ahead of the strike. Jia borrowed $ 2.7 million to start bankruptcy in one of Faraday Future's holding companies in October last year, after which he borrowed $ 6.4 million from the same agency to fund the process.
Faraday Future said in a statement released Friday that the approval of the plan "removed the biggest obstacle to the [the company’s] capital raising effort." Earlier this week, the company's new CEO (and former BMW executive) Kasten Bryfeld said the funding efforts were delayed slightly by the plague.