China’s top court put two units of LeEco on an official state blacklist of debt defaulters earlier this month, as originally noted by South China Morning Post. The Supreme People’s Court specifically blacklisted Leshi Holding and Leshi Yidong as debt defaulters, noting how the two have currently defaulted on 107 million Yuan, or approximately $16.38 million. While defaulting on a loan doesn’t automatically put a company on the aforementioned blacklist in China, being able to pay off a debt but refusing to do so does, which is what has reportedly been the case with two of LeEco’s affiliates, according to the top court in the Far Eastern country.
Leshi Holding executive Cheng Shisheng was recently quoted as saying that the firm is currently in the process of repaying its loans as it’s making moves to liquidate some of its assets which are supposedly significantly more valuable than the total value of its debts. The company’s blacklisting suggests a somewhat different story, as the Supreme People’s Court at the very least doesn’t believe Leshi Holding is liquidating its assets quickly enough or it likely wouldn’t have sanctioned the company in the first place, warning potential creditors against collaborating with the firm.
The latest turn of events comes as LeEco is amid a major cash crunch which brought many of its operations to a halt, with the struggling consumer electronics manufacturer being forced to pull from a number of high-profile deals including a $2 billion acquisition of VIZIO, a failure over which the U.S. TV company even filed for litigation, seeking $75 million from LeEco. The firm also significantly downsized its operations in the United States, having recently laid off approximately 70 percent of its stateside workforce, in addition to exploring liquidation options for some of its U.S. assets. According to a number of industry watchers, LeEco’s current predicament was caused by its general business strategy which saw it expand in too many directions too quickly, consequently exhausting its cash flow and leaving the company without enough resources to pay off its debts while many of its ventures are still far from profitability. Prior to its money issues, LeEco has been investing in everything from smartphones and tablets to TVs, scooters, self-driving vehicles, and artificial intelligence services.