Jia Yueting, the Chinese internet tycoon who co-founded California-based electric car startup Faraday Future Inc., has filed for Chapter 11 bankruptcy in the U.S.
Jia faces $2.3 billion in claims from creditors in China, according to Bloomberg News. Faraday says Jia intends to transfer his stake in the startup to Smart King Ltd., the global holding company for Faraday, forming a creditor trust through which to pay off his debts.
Faraday emphasizes that Jia’s personal financial difficulties have no impact on the company’s normal business operations. The company hopes to make an initial public offering in 2020.
Jia stepped down as CEO of LeEco (Lishi Internet Information & Technology Corp.), which backed Faraday, two years ago as his empire began to falter financially.
In January, the startup resolved a long-running dispute between Jia and the company’s largest investor, China’s Evergrande Health Industry Group, that has allowed Faraday to pursue other investors.
Under terms of the deal, Evergrande gained control of Faraday operations in China and agreed to provide the startup with a $225 million bridge loan to help it complete development of its first tow models, the high performance FF91 car and more affordable FF81 crossover vehicle.
Last month Faraday hired Carson Breitfeld, a former BMW executive and past CEO of China’s Byton Ltd. EV startup, to take over as its CEO.
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