A Beijing court has approved China Construction Bank (CCB)’s application to freeze the assets of LeTV Holdings and LeEco founder Jia Yueting, with a total value of RMB 250 million ($37.2 million), local media is reporting (in Chinese).
The Beijing civil court ruled on July 25 that assets owned by Jia, Leshi Internet Information & Technology Co., Leshi Holdings, and Jia Yuemin, Jia’s elder brother and Leshi Holdings director can be frozen for up to three years.
It’s been one month since another Chinese court ordered Jia’s assets frozen. On July 5, Shanghai High People’s Court froze 519 million LeTV shares worth around RMB 15.927 billion ($2.3 billion), calculated at 30.68 apiece. The court carried out this order on behalf of China Merchants Bank.
However, China Construction Bank and China Merchants Bank are only some of the banks involved. LeEco has also borrowed tens of billion RMB from Ping An Bank.
LeEco’s early signs of trouble started showing up last October, when its cash crunch worsened at an alarming speed, partly due to its outstretched overseas expansion efforts. LeEco expanded its business to U.S. in 2016, but the company’s expansion to U.S. had gone too far, despite the limited capital and resources, resulting in “an apparent lack of momentum” in various businesses.
One previous full-time employee at LeEco pointed out that LeEco’s failed globalization process attributes to these four reasons: language, the resonance of organizational values, leadership and management skills of those in power, and localization.
Following the difficult situation for LeEco, there has been a transition in LeEco’s leadership. Early July, Jia Yueting stepped as chairman of Leshi, following his resignation from the listed company’s CEO role in May. Jia was then named as a global chairman of LeEco’s electric business to focus on making electric vehicles. On July 21, Leshi named Sun Hongbin, chairman of Sunac China Holdings Ltd. as a chairman of Leshi, now controlling LeEco’s healthier businesses.