Further blow to LeEco as smartphone unit Coolpad hit with lawsuit to repay US$11.8m loan

Legal action comes to light a week after cash-strapped company was branded a ‘Ponzi scheme’ in a post made on popular social media WeChat by Tencent Holdings co-founder Zeng Liqing

PUBLISHED : Thursday, 27 July, 2017, 9:34pm
UPDATED : Friday, 28 July, 2017, 12:09am

Coolpad Group, the struggling smartphone supplier controlled by cash-strapped LeEco, has revealed that one of its subsidiaries was recently slapped with a civil complaint by Ping An Bank to repay a loan worth 80 million yuan (US$11.8 million).

The case lodged in the Shenzhen Intermediate People’s Court marks the latest financial predicament to hit the desk of troubled LeEco founder and chairman Jia Yueting, who also serves as chairman of Coolpad.

The Shenzhen branch of Ping An Bank, a unit of Ping An Insurance (Group) Company, said it has the right to recover the debt owed by Coolpad subsidiary Yulong Computer Communication Technology after it found that the financial situation of another subsidiary, which acted as one of the loan guarantors, has deteriorated.

It alleged such a situation “will seriously affect the borrower’s business and performance”.

Jia said in a regulatory filing on Thursday that the loan contract, which has a term of up to August 15 this year, has not yet expired.

He pointed out that Coolpad has consulted its lawyers, and is “actively collecting evidence to defend itself against the civil complaint”.

The lawsuit has come to light about a week after mainland internet conglomerate LeEco was branded a “Ponzi scheme” in a post made on popular social media WeChat by Tencent Holdings co-founder Zeng Liqing.

“It [LeEco] is obviously a Ponzi scheme. You don’t belong in the investment market or entrepreneurial world if you can’t see that,” wrote Zeng.

LeEco, once a high-flying technology company that raised more than US$1 billion in funding for its electric car development plans, is now battling to stay afloat amid a mountain of debt, huge losses and court orders freezing its assets.

In April, LeEco beat a retreat from an ambitious expansion in the United States by scrapping its US$2 billion acquisition of American television maker Vizio.