Brokerage China Orient Securities is suing the brother of tycoon Jia Yueting for breaking a share pledging agreement, a blow for Jia’s crumbling tech conglomerate LeEco, which had just repaid part of its debts to another creditor, China Merchants Bank.
券商中国东方证券(China Orient Securities)正在起诉大亨贾跃亭的哥哥，指控他未能履行一份股权质押协议。这对贾跃亭摇摇欲坠的科技集团乐视(LeEco)是一次打击。乐视刚向另一个债权人招商银行(China Merchants Bank)偿还了部分债务。
The company had just taken steps forward on plugging its debt hole by repaying over $100m of its debts to major creditor China Merchants Bank this week. China Merchants confirmed Wednesday that it had received the payment.
The lawsuit, filed by China Orient in Shanghai court, alleges that Jia Yuemin broke an agreement to buy back his Rmb200m ($30.62m) equity share in LeEco’s Shenzhen-listed arm with interest. There was no immediate comment from LeEco.
Share pledging to secure loans is a common fundraising tactic for asset-rich, cash-poor founders. Both Mr Jia, his sister and his brother have already pledged the entirety of their shares in LeEco’s listed arm and a connected entity.
However, it is a risky practice that can backfire if share prices slide in value. LeEco’s stock has been frozen since last year.
Mr Jia, LeEco’s founder, ceded control over his tech empire to property developer and investor Sunac last year after many questioned his leadership. He is currently in the US raising funds for his electric car venture, Faraday Future.
Last month, Mr Jia was ordered by China’s securities regulators in an open letter to return to mainland China and settle his debts, an unprecedented move which Mr Jia did not heed. He sent his wife, the actress Gan Wei, in his place.
Ms Gan is now working to negotiate an asset thaw with China Merchants, which won a court case to freeze $180m of LeEco’s assets in July in lieu of missed debt repayments.
“We hope that our assets will be unfrozen so that we can pay back more debt owed to creditors,” she wrote on her social media account.
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