What should I do if I owe my debt?
Editor’s note: This article is from Daily Economic News, author Song Kejia.
The operation of LeTV has been difficult, and this time, even the legal fees of 6.12 million yuan can not afford to pay.
On November 5th, Liu Yanfeng, the current chairman and CEO of LeTV Information Technology (Beijing) Co., Ltd. (300104, LeTV), said that the main difficulty facing LeTV is in cash flow. After the management and the company’s employees, the company’s cash flow is still unable to make ends meet, but can barely support, to ensure that the company’s necessary staff wages are issued on time.
Liu Yanfeng said that the 6.16 million legal fees involved in the auction of the Lerong Building have far exceeded the current cash payment capacity of LeTV. He also said that at present, there is still uncertainty about the outcome of the lawsuit, and the company insists on the situation where employees have nowhere to work.
At the same time, Jia Yueting, who applied for personal bankruptcy for less than a month, was also rumored to be “$3 million to buy luxury homes, transfer equity, conceal or transfer assets”, which has aroused widespread concern in domestic public opinion.
On November 5th, Jia Yueting’s debt processing team released a message saying that the recent “Jia Yueting’s $3 million purchase of luxury homes, transfer of equity, concealment or transfer of assets” was a malicious and ulterior motive.
LeTV is directly facing a complete break in cash flow
After LeTV.com disclosed a loss of 10.2 billion yuan in the first three quarters, on the evening of November 5th, LeTV.com released a notice on the suspension of listing of the company’s shares and the existence of a termination risk. The announcement shows that as of September 30 this year, the balance of the arrears of the major shareholders and their actual controlled enterprises on the scope of the merger of listed companies reached approximately 1.975 billion yuan.
Leiwang.com, the current chairman and CEO of LeTV, said in a media interview that the company had to face a direct break in cash flow due to the company’s recent unplanned litigation costs associated with the Lerong Building. “The company is currently in an extremely difficult business operation. The operating cash is preferentially used to pay employee wages, social security and other human-related expenses.” Liu Yanfeng said: The company has no ability to pay related litigation costs.
Liu Yanfeng said that LeTV recently received a notice of payment of litigation fees from Beijing No. 3 Intermediate People’s Court. The lawsuit is an enforcement objection to the company’s office building being required to execute the retreat, involving a total of 6.12 million litigation fees. Regardless of the outcome of future litigation, the litigation fee is borne by the company.
It is worth noting that this month, LeTV’s office, Lerong Building (formerly LeTV Building) will usher in another round of public auctions.
LeTV.com revealed on the evening of October 28 that this year’s 3 quarterly report shows: the company’s top threeQuarterly revenue decreased by 71.69% year-on-year, and net profit loss was 10.194 billion yuan, a year-on-year decrease of 584.36%. “Bao Bao” has become the most important work of LeTV. As a former White Horse stock, LeTV’s share price has dropped from the highest price of 44.72 yuan in 2015 to 1.69 yuan today.
As of September 30, 2019, the amount of notes payable and accounts payable in the consolidated statement of LeTV was RMB 3.173 billion, mainly due to the arrears of suppliers and service providers. LeTV’s consolidated statements included long-term and short-term loans totaling RMB42 million, and other current liabilities of RMB3,304 million, mainly due to LeTV’s borrowing from financial institutions and non-financial companies.
As of the end of the third quarter, Jia Yueting held 921 million shares of LeTV, freezing 921 million shares and pleasing 857 million shares. And all of its pledged stocks have already touched the closing line agreed by the agreement, and the actual controller of LeTV has the risk of change.
Since the crisis of LeTV, the company’s employee turnover has been severe: According to the LeEo Annual Report, its number of employees in 2016 was 5,389, and by 2018, the number of employees was only 456.
Jia Yueting buys a mansion for $3 million?
When LeTV was in deep crisis, the personal news about Jia Yueting was again heard.
Recently, there have been some news on the Internet that the 3,300-square-foot luxury home purchased by Jia Yueting in August this year is located on the Palos Wilders Peninsula in Los Angeles, close to another coastal mansion. At the same time, there is also news that Jia Yueting is currently holding an L-1 visa, which is suitable for businesses in China who are functioning well to do business in the United States. Jia Yueting’s private property was not fully announced, and the application for personal bankruptcy was only to avoid debt.
On the afternoon of November 5th, the “Jia Yueting Debt Handling Team” issued a new Weibo response, saying that “about Jia Yueting’s claim of purchasing a luxury home worth more than $3 million in August this year” is purely false. Jia Yueting has submitted an application for personal bankruptcy reorganization. Any so-called transfer of assets through bulk consumption or agents will be traced back two years ago. According to US law, any concealment is impossible.
Jia Yueting’s debt processing team said that very few creditors deprived Jia Yueting of the FF stake in the ultra-low-cost, and then controlled the FF company, uploaded the so-called statement on the bankruptcy agency EPIQ website, and repeatedly called the unsuspecting media. The Panel’s attempt to obstruct the smooth progress of bankruptcy and reorganization has seriously damaged the interests of other creditors, and the Panel strongly condemned it.
On October 14th, the Jia Yueting Debt Handling Team also issued the “Declaration on Mr. Jia Yueting’s Personal Bankruptcy Reorganization and the Establishment of Creditor Trust”, which mentioned that more than 90% of Jia Yueting’s debts are debts guaranteed by the relevant companies. Since the collapse of LeTV, as of now, Jia Yueting has repaid debts of more than $3 billion for related companies.
In this regard, Liu Yanfeng said that the company has issued a clarification announcement on the statement that Jia Yueting has repaid the company’s debts over $3 billion. “LeTV has repeatedly declared that it has guaranteed repayment since the outbreak of the business crisis in 2017. However, we have not noticed any relevant reports from the media about Mr. Jia’s application for bankruptcy. In the United States, bankruptcy is applied, and US law is applicable. We can’t judge the impact of bankruptcy in the US on corporate debt. As of now, the major shareholder and its related party debt processing team have not come up with a complete implementation plan that can be implemented in substance, and LeTV has not received any cash for the debt solution.” Liu Yanfeng said Not only that, but in fact, due to the illegal operation of major shareholders, the company has to bear more business pressure outside the known debt.