1 min read
Ofo rumor mill continues as they battle whispers of bankruptcy
Over the past few months, rumors of ofo’s mounting debt, lawsuits, and potential mergers have been making the rounds in local news headlines.
The latest one, surfaced yesterday, alleged that the Chinese bike rental firm is preparing for bankruptcy reorganization plans. The news was first reported by local media Jiemian.com, who claimed to have obtained a company financial statement from six months ago. The document indicated that, at the time, ofo’s debt was about RMB 6.5 billion, including RMB 3.65 billion of users’ deposit and RMB 1.02 billion owed to its suppliers. A brokerage company has reportedly started a proposal for ofo’s bankruptcy plans.
“Judging by the status quo, [ofo] might have been involved in lawsuits… Otherwise, it wouldn’t have filed for reorganization”, said Chen Shizhong, a lawyer at Beijing Jinsh Law Firm.
However, ofo has refuted the claim saying that the bankruptcy reorganization rumor was a “false report”. In a statement, ofo said it is still operating independently and it is businesses are advancing as usual. “The false report has seriously damaged ofo’s brand and reputation and a malicious defamation against the company.” The company said it will pursue legal action to protect its interests.
Chinese cut-throat bike-rental industry is taking its toll on the big players, namely Mobike and ofo.
In September, ofo employees claimed that the company continues to lay off staff in the midst of the company’s downsizing efforts. Although ofo denied the layoffs, co-founder You Xin signaled earlier in May that the company would undergo significant downsizing as it retreats from international markets. In late October, news reports surfaced suggesting ofo might withdraw its current operations from Japan. In the same week, its founder and CEO Da Wei removed himself from his position as the company’s legal representative in the midst of mounting lawsuits from unpaid suppliers.
There has also been a number of rumored acquisitions underway. In August, Chinese ride-hailing giant Didi Chuxing was reportedly closing an acquisition deal with ofo. In mid-October, Hello TransTech, previously known as Hello Bike, was also reported to be in talks with ofo about a potential merger.