Didi rival Yidao backtracks on driver-payment mechanism amid bankruptcy rumors

Chinese ride-hailing firm Yidao Yongche has delayed the relaunch of an online cash withdrawal mechanism that would allow its drivers to get paid, breaking an earlier pledge to do so by Feb. 22.

“We have encountered a lot of unexpected incidents as the capital market cools down,” The Paper (in Chinese) cited Yidao as saying.

The news represent the latest in a series of financial woes for the company under its current backer, Taoyun Capital. Beijing-based investment company Taoyun took over Yidao from disgraced Chinese entrepreneur Jia Yueting’s technology conglomerate LeEco in June 2017. Jia is also the CEO of struggling electric vehicle startup Faraday Future. Taoyun is one of the main creditors asking Jia to pay off his debts.

Yidao sent a notice to drivers on Thursday evening, saying Taoyun had “provided billions of money” to keep its operations going. 

Taoyun’s president, Wen Xiaodong, announced earlier in January that Taoyun was looking for people to buy Taoyun’s shares in Yidao for half their listed value because, after Taoyun had helped resolve Yidao’s debt crisis to the tune of RMB 6 billion (roughly $900 million) over a two year period, Taoyun was struggling to keep Yidao running.

Yidao was reportedly forced to move out of the building where it is headquartered in Beijing on Tuesday, and the rumors about its going broke began circulating on Chinese media since then. Yidao dismissed the bankruptcy rumors, claiming it is looking for new offices in Beijing and that it would let drivers know immediately the location of the new offices.

Yidao said in December it hoped to relaunch the online withdrawal mechanism to drivers on Jan. 25. This was followed by another statement on Jan. 26 that delayed the date of such withdrawals to Feb. 22, as the company had been “assisting” its main shareholder Taoyun to solve the debt issues with its former owner LeEco.