Jia Yueting owes tens of billions of US dollars, and the shocking truth is exposed
I. Jia Yueting's debt crisis
In 2017, the Chinese internet giant LeEco erupted in a debt crisis that not only affected the company itself, but also embroiled LeEco's founder, Jia Yueting, in an unprecedented storm of personal debt. According to Jia Yueting's own admission, the debt he guarantees for the LeEco system is as high as $12 billion. This is an unbelievably astronomical amount, enough to daunt any ordinary person.
LeEco was once one of China's most high-profile emerging technology companies, once occupying a leading position in mobile video, smart TV, Internet TV and other fields. However, due to the rapid expansion and broken cash flow, LeEco's operations are in trouble. As the actual controller of the company, Jia Yueting had to pay for the company's debts. This personal guaranteed debt of up to $12 billion is equivalent to him using his entire net worth as collateral, which is rare among Chinese entrepreneurs.
Jia Yueting was once regarded as China's version of "Elon Musk", with grand tech dreams and extraordinary entrepreneurial talents. But the outbreak of the debt crisis undoubtedly cast a shadow on his career. He had to start running around to pay off this huge debt.
II. Debt repayment is difficult
In order to repay the debt, Jia Yueting had to take some extreme measures, including selling his assets at a low price and being forced to auction off his assets. In 2017, he sold Faraday Future's headquarters building and other assets to a real estate company, and later leased them back from the company. This practice of "selling land and renting it back" was undoubtedly an expedient measure, but it also reflected his helplessness at that time.
In 2022, the situation worsened, and Faraday Future had to sell its only car factory at a low price and lease it back. This is undoubtedly a dangerous signal, which means that Jia Yueting's electric car dream has fallen into trouble. It is rare in the history of business for a billionaire to have to sell his assets at a low price to pay off his debts.
In addition to selling assets at a low price, Jia Yueting has also adopted some more controversial practices. He reportedly set up a $500 million irrevocable trust fund for his children in an attempt to avoid creditors' access. The move has sparked widespread criticism as an attempt to avoid debt and preserve some of the wealth for the children. Jia Yueting himself denied that there was a practice of setting up a family trust for his children.
Despite Jia Yueting's efforts, the cloud of the debt crisis still looms over him. He and LeEco Holdings have been listed as judgment defaulters on many occasions, and the court has had to take measures such as restricting high consumption and forcing the auction of assets to ensure the interests of creditors. According to statistics, up to now, the court's enforcement of Jia Yueting has exceeded 20 billion yuan. This figure is enough to show how huge the debt pressure Jia Yueting is facing.
III. Faraday Future's Dilemma
Despite being mired in a debt crisis, Jia Yueting did not give up his dream of electric vehicles. He still operates Faraday Future Corporation in the United States and successfully listed it on the NASDAQ in July 2021. This is undoubtedly a milestone worth celebrating, and it is also seen as a signal for Jia Yueting's comeback.
Faraday Future's operations are not promising. Since going public, the company has been in the red and is at risk of being forced to delist from the Nasdaq. This undoubtedly brought new pressure to Jia Yueting, who not only had to pay for LeEco's debts, but also fought for Faraday's future survival.
Jia Yueting's debt crisis reflects the legal and financial risks that Chinese entrepreneurs face when their operations fail. As a former technology star, Jia Yueting's experience has undoubtedly sounded the alarm for the entire entrepreneurial circle. He had to repay his debts by selling his assets at a low price and setting up a trust fund, but he still couldn't get rid of the fate of being listed as a dishonest person subject to execution.
Jia Yueting's story also reflects his dedication to the dream of electric vehicles. Despite all the difficulties, he continued to run Faraday Future, which eventually took him public. The company's continuous losses also make people question whether Jia Yueting still has a chance to make a comeback.