Leshi Holdings, or better known simply as LeEco, is currently facing a financial crisis, after its CEO claimed that the company expanded too fast, in too many sectors. To add more to its financial woes, a Chinese manufacturer is now suing LeEco for unpaid bills. Zhejiang Haosheng Electronic Technology, produces speakers for smartphones and LeEco happens to be a client. Now, LeEco's mobile unit, LeMobile is being sued by the company in a bid to recover 51.74 million yuan ($7.46 million) in unpaid bills.
According to a statement from the plaintiff, LeMobile signed a contract back on November 16th, whereby the electronics company agreed to pay 11.02 million yuan ($1.59 million) along with $5.93 million in nine installments. Included in the payment would be an annual 6% interest rate. However, LeMobile failed to pay the first installment which was to be paid on December 11th in 2016. The case is now being judged by the Shanghai International Economic & Trade Arbitration Commission, and Jie Yuting, along with his brother, Jie Yumin, have been listed as defendants. Haosheng is suing to recover the entire sum owed by LeMobile, including 600,000 yuan ($86,544) spent on legal fees. LeEco isn't only in debt with Haosheng, as other vendors are also seeking payment from the company, including AAC Technologies Holdings, Compal Electronics, and Truly International Holdings. All three vendors have disclosed the debts owed by LeEco to the public, while Compal has stated that LeEco has settled its debts with the company.
LeEco was established back in 2004, and has since come a long way, diversifying its business, which includes video streaming, manufacturing of smartphones and TVs, and now it plans to manufacture electric cars. However, analysts have pointed out that LeEco may be forced out of the automobile sector due to financial pressure and it also lacks any competitive advantage in the market. It is also widely known that LeEco is facing a severe crash crunch, after the founder of the company, Jie Yuting penned a letter to his employees, stating over expansion as the reason for the crisis. In the midst of its financial crisis, LeEco reported just over a week back, that it was receiving $1.4 billion from an unspecified investor, though it is not known what the company will use the cash for.