Amid rumors of bankruptcy and acquisition, Chinese bike rental firm ofo has said that its system for refunding users’ deposits is functioning normally, despite increased processing times.
The company initially handled requests for refunds in up to three days, later increasing the waiting period to 10 days, and then eventually to 15 days.
“Because of the recent change of office address, some of ofo’s servers need to be migrated, resulting in a temporary extension of the deposit refund period. After the relevant work is completed, the refund deposit period will return to normal,” the company told local media.
ofo recently moved its headquarters to the Internet Finance building in Beijing, 15 minutes away from its previous office space. The company said that its rental term had expired.
ofo’s ability to pay back users’ deposits has been questioned. On Friday (November 23), ofo users who had not upgraded their deposit from its RMB 99 tier to RMB 199 tier system were presented with an in-app pop up allowing them to transfer their deposits to online loan platform PPmoney. These can then be converted to an investment within the lender’s ecosystem while allowing users to ride without a deposit. The move was criticized, with commenters saying that the company is attempting to avoid paying back deposits and selling its users to a different company.
Rumors of ofo’s cash crunch have been circulating for some time. Most recently, the company was reportedly preparing for bankruptcy after accumulating more than RMB 6.5 billion ($935 million) in debt, RMB 3.65 billion of which included users’ deposit and RMB 1.02 billion was owed to its suppliers.
ofo founder and CEO Da Wei in September removed himself from his position as the company’s legal representative as a result of mounting lawsuits from unpaid suppliers. The company has also denied that it is laying off employees en masse and that it is unable to pay its workers. Earlier this year, it halted its ambitious global expansion plan, saying it intends to focus on what it deems to be priority markets during the retreat.