Exclusive: Cash-Strapped LeEco Sees Assets Frozen
摘要： As LeEco’s debt issue continues to loom large, more crises emerge from the broken fund chain. China Merchants Bank said in a statement Tuesday that it had filed to have some of LeEco’s assets frozen as a subsidiary (Leview Mobile HK) had failed to make interest payment on a loan on time. Following that, more reports on the company’s frozen assets have surfaced.
As LeEco’s debt issue continues to loom large, more crises emerge from the broken fund chain. China Merchants Bank said in a statement Tuesday that it had filed to have some of LeEco’s assets frozen as its subsidiary Leview Mobile HK had failed to make interest payment on a loan on time. Following that, more reports on the company’s frozen assets have surfaced.
According to information collected through legal and media channels, over 20 asset-freezing orders had been issued by the court against LeEco's units, including Le Holdings, Leshizhixin (LeTV unit), Leshi Mobile Intelligence (Smartphone unit), Leshi Film, LeCloud etc., due to asset preservation requests. Court orders include cash block, stock right and other asset freezes. To add more fuel to the flame, an increasing number of LeEco’s collaborative partners have been applying for judicial guranatee from LeEco's units as well.
Judicial guranatee is a legal process by which a court of law, at the request of a creditor, designates specific property owned by the debtor to be transferred to the creditor, or sold for the benefit of the creditor. When the debtor goes into bankruptcy and the bankruptcy liquidation process is initiated, creditors who have previously filed for asset preservation would have the priority to get the payment. And therefore, in a case where the debtor is plagued by serious debts, once a company files for attachment, other crediting companies would follow suit.
Previously, Zhao Hejuan, TMTPost’s CEO and former seasoned finance journalist from Caixin, had analyzed LeEco’s listed unit and other privately-held units’ complex connected transactions in the article Connected Transaction, The Nature of LeEco's Bogus Boom. It’s apparent that LeEco’s smartphone, TV and film units have played a major role in the connected transactions. As these privately held subsidiaries are connected, the listed unit Leshi Internet Information and Technology is also being dragged down the road.
Leshi Mobile Intelligence, first blood in the cash crunch
Tencent Finance reports that a total asset of ￥1.237 billion from Jia Yueting, Jia’s wife, and three LeEco subsidiaries have been frozen by court order last week. In accordance with a civic ruling paper from Shanghai High People’s Court, China Merchants Bank had filed an application to freeze an asset of ￥1,236,584,434.07 from Jia Yueting, Jia’s wife Gan Wei, and Le Holdings, Leshi Mobile Intelligence and Leview Mobile HK Limited’s bank accounts or other pledged assets. China Merchants Bank has credit guaranteed its assets and its application has been recognized by the court as law conforming.
In addition, on June 29th, Shanghai High People’s Court had frozen part of the stock rights and bonus from Dasheng Technology that belong to Le Holdings. According to official information, Le Holdings invested ￥80 million in Dasheng Technology, accounting for 40% of the stock rights. The order freezes the stock rights and bonus for three years, report says. During this period, the stock rights and bonus can’t be traded, transferred, cashed out, or pledged etc. without the court's approval. The freeze starts from June 29th 2017 and end on June 28th 2020.
Online data shows Dasheng car service, a car e-commerce platform, is the main operation body of Dasheng Technology. The company was co-invested by Guangzhou Automobile Group, LeEco Holdings and Urtrust Insurance and established on June 8th 2016.
LeEco and China Merchants Bank’s business relationship can date back to two years ago. In November 2015, LeEco signed a strategic cooperation agreement with China Merchants Bank Shanghai. The agreement mentions that China Merchants Bank Shanghai would provide Le Holdings and other subsidiaries with a strategic global general credit limit of ￥10 billion so as to satisfy LeEco’s domestic and overseas capital demands.
China Merchants Bank’s first credit business with LeEco was the loan of HK$2.74 billion issued in July 2015. The main sides of the court order this time, Leview Mobile HK Limited and Leshi Mobile Intelligence, are both involved in the use of this loan.
On this, Le Holdings’ relevant personnel stated:
It’s reported that China Merchants Bank’s asset freeze is caused by a financial loan of LeEco’s smartphone unit. But we are pledging some assets for this loan, which is enough to cover it. The company’s higher ups are discussing this issue with financial organizations including China Merchants Bank, in hopes of solving this loan problem soon.
China Merchants Bank had also later responded to this news and claimed that the Shanghai branch had filed for asset preservation at Shanghai High People’s Court, saying that it had to adopt legal approach to collect the debt after failing to get payment from LeEco on time.
Leshizhixni had triggered five cases of asset freeze, with a combined asset value of ￥300 million involved
Leshizhixin, which is considered as LeEco’s best asset by the public, is also having asset freeze issues.
TMTPost learned from the national judicial system that Tianjin’s court had ruled on five cases related to Leshizhixin’s asset freeze. Two asset preservation requests were made by Ruishengkaitai, one was made by Lisheng Technology Changzhou, one from Hi-P International Shanghai, one from Hong Kong Huaqing Electronics. The value amount combined is around ￥300 million and the requests have won the support of the court.
In details, Ruishengkaitai’s two requests include the freeze of the ￥69,779,105.05 bank deposit, pledges and other assets, as well as the freeze of ￥84,148,891.14. The total amount here exceeds 150 million yuan. Hi-P International Shanghai on the other hand filed to have ￥21,128,871.2 frozen while by Lisheng Technology Changzhou applied for freezing ￥47,584,372.03. Hong Kong Huaqing Electronics filed to have ￥64,485,483.17 frozen.
Besides that, LeCloud also got an asset freeze application from HUAXSOFT, involving an amount of ￥2.6 million.
Perhaps, due to joint guarantee responsibilities, these asset freeze applications also result in the freeze of Le Holdings and Leshi Mobile Intelligence’s asset.
14 asset freeze cases of Leshi Film are stock right freeze
Furthermore, according to China Fund’s report, besides Shanghai High People’s Court, courts in Beijing, Tianjin and Jinan etc. have already had asset freeze cases concerning LeEco earlier.
China’s national enterprise credit information publicity system’s data shows as of June 30th 2017, Leshi Film has 14 judicial asset freeze cases. Besides the recent freeze ordered by Shanghai High People’s Court, there are other 13 cases, involving six regional courts, which are Beijing High People’s Court, No.3 Intermediate People’s Court, NO.4 Intermediate People’s Court, Chaoyang District People’s Court, Tianjin No.2 Intermediate People’s Court and Jinan Intermediate People’s Court in Shandong province.
The earliest two asset freeze cases took place on December 5th 2016, with order carried out by Tianjin No.2 Intermediate People’s Court. The court had frozen 49.85 million shares and 69.78 million shares. The freeze time is from December 5th 2016 to December 4th 2019.
Subsequently, Beijing High People’s Court froze Leshi Film’s stock rights (120 million and 243 million stock rights). The freeze started on January 22nd 2017, with a freeze period of three years. According to official information, the two asset freeze orders have frozen 363 million shares, which is two times larger than the amount frozen by Shanghai High People’s Court order.
The single order that freeze the largest amount is the order from Beijing No.3 Intermediate People’s Court, which freezes 277 million shares.
There are seven other asset freeze orders on Le Holdings from Beijing’s courts, involving No.3 Intermediate People’s Court, NO.4 Intermediate People’s Court and Chaoyang District People’s Court. There are orders that only freeze small amounts like 100,000 and 200,000, but also large amount like 183 million.
On June 26th 2017, Jinan Intermediate People’s Court in Shandong province froze Leshi Film’s stock rights held by Le Holdings, a total amount of 78 million shares. The freeze period is also three years.
To add to the pile, Le Holdings’ Leshi Investment Management and Leshi Finance’s assets had also been frozen by the court.
The executive court and execution notice are the same of Leshi Film’s case. Leshi Investment Management’s 500 million stock rights have all been frozen, and it’s been frozen by Beijing High People’s Court and No.3 Intermediate People’s Court.
It’s worth noting that Leshi Investment had completed stock right transfer on May 11th.
Before the stock right transfer, Leshi Investment Management was a sole corporation. After the transfer, it became a company invested by natural person or a holding company. Jia Yuefang and Wu Meng became the shareholders after the transfer. Jia Yuefang subscribed to the 499.95 million yuan of the 500 million yuan register capital, but in reality didn’t pay a cent.
The prospectus of LeEco’s listed unit states that Jia Yueting and Jia Yuefang are siblings. There had been report that on June 13th LeEco Holdings had its legal representative changed from Jia Yueting to Wu Meng. Meanwhile, Wu Meng has replaced Jia Yueting’s sister Jia Yuefang as the manager of Le Holdings, which appears to be a risk evasion move.
The article is published with authorization from the author @Ti Girl, please note source and hyperlink when reproduce.]
Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.