It seems the uphill battle for funding of Jia Yueting, founder of Faraday Future (FF), will only be getting steeper. On Dec. 13, a federal judge announced to temporarily freeze Jia’s 33 percent stake in the Gardena-based electric car startup, and put a protective order on his three high-end homes in Rancho Palos Verdes.
The freezing of Jia’s FF assets by U.S. District Court Judge James Otero in Los Angeles had nothing to do with the EV startup directly. It was rather a result of Jia’s other company, LeEco, and its financial obligation to pay $7 million to Shanghai Lan Cai Asset Management Co, Ltd.
Lan Cai used to be close partners of Le.com and LeSports, both of which are owned by LeEco. In August 2016, Le.com led an investment in Lan Cai with Legend Holdings Corporation following after. The two completed Lancai’s B-Series funding totalling 180 billion yuan ($26 billion).
In December 2016, LeSports borrowed 50 million yuan ($22 billion) from Lan Cai, with Jia and LeEco serving as the guarantors of the debt. The agreement was that the lump sum was to be paid in full within 12 months. Clearly, the repayment did not occur.
The freeze on Jia’s 33 percent Faraday stake comes amid a legal battle between Faraday and its biggest investor, Chinese conglomerate Evergrande. Although Evergrande took 45 percent of the company in exchange for $2 billion, different share classes keep Jia and his allies in voting control.
Due to its legal disputes and financial difficulty, FF has laid off more than half of its employees and cut salaries for the ones remaining just two months ago. The company’s short-lived “decisive victory” against Evergrande isn’t proving itself very useful with all the financial burden it is still carrying.
FF employees are keeping a positive attitude against the hardships. “Despite adversities, we continue to make progress on FF91 as our engineers recently completed two additional pre-production vehicles with focus on getting ramped up for production,” tweeted FF engineer Dheeraj Makena yesterday.
Judging by how the events are unfolding, consumers may need to wait another few months before the company’s FF91 finally hit the market.
Featured photo credit to Dheeraj Makena (@dheerajmakena)