It’s seem that the China Securities Regulatory Commission (CSRC) is tired of tech giant LeEco’s CEO, Jia Yueting, and his promises to address the growing debt of his streaming-to-electric-car startup and is summoning him to China by December 31 in order to “fulfill his obligation and protect investors’ rights,” according to Reuters who first reported the news.
Jia’s LeEco was founded like a Chinese version and competitor of Netflix but later started a round of acquisitions to try to beat Tesla in the electric car market. Later, LeEco struggled to pay its debt amid the rapid expansion into multiple sectors that provoked a cash shortage and a plunge in share prices and ultimately led them to multiple defaults with creditors.
“Firms you control owe huge amounts to listed companies, which has not yet been returned. This behavior seriously harms the legal rights of listed firms and the personal interests of a wide range of investors,” read the CSRC announcement.
According to Chinese sources, LeEco owes $1.53 billion after 13 years of operations during which it passed from a Netflix-like stream services to a hardware provider with phones, television sets, and electric cars. Jia’s personal fortune is estimated at $306 million, which is probably at risk, as Chinese authorities have maneuver edin the past to freeze Jia’s assets for as much as $180 million.
A local unit of LeEco, LE Corporation Limited, filed a petition to the local high court to wind up the company, in a clear indication of the company’s worries. On the other hand, a spokeswoman for LeEco’s main unit, Leshi, said to Reuters that Jia’s personal behavior would not impact its overall operations, and that Jia’s ties with the company are no longer “that close,” as he stepped down as CEO of Leshi in May.
It’s yet to see if Mr. Jia complies at this time, as he ignored past citations by Chinese authorities, like one this past September. He has until December 31 to make his case and change the dynamic of uncertainty that has plagued the operations of a company once regarded as a “success example” of the thriving Chinese tech industry.