The founder and former chief executive of troubled EV startup Faraday Future, Jia Yueting, has filed for Chapter 11 bankruptcy in the United States, The Verge reports.
According to the bankruptcy filing made in Delaware court, Yueting claims he owes more than $3.6 billion to more than 100 creditors due to the collapse of LeEco, a tech conglomerate that he founded in China.
Yueting is offering to satisfy his debts through a trust backed by the value of his ownership stake in Faraday Future before he proceeds in court with the Chapter 11 filing.
This trust could pay out to creditors if the electric car startup ever goes public. This would be the best possible outcome for the businessman. At least 90 per cent of the people or businesses he owes money to must agree to the restructuring plan by November 8th. Creditors will also have to agree to release Yueting and his wife of all personal liability and drop existing claims against him.
Additionally, Yueting is asking his creditors to vote on Chapter 11 bankruptcy as a backup plan. This path to restitution would also see him leverage his stake in Faraday Future but include more involvement and oversight from the court.
Lawyers for the entrepreneur insist that it is important creditors come to a swift agreement or Faraday Future may be unable to raise money while Yueting’s Chinese debts hang in the balance. Yueting has also warned that he may need to declare Chapter 7 bankruptcy and fully liquidate all of his assets resulting in smaller payments to creditors.