China News Service Client Beijing, July 3 (Zhang Xu) Jia Yueting's "Return to China Next Week" seems to have a sudden turnaround.

  On July 2, Jia Yueting published an open letter on his personal account, announcing that he had completed his personal bankruptcy reorganization on June 26. He said that for himself, this meant a restart in life. In order to express its apologies to LeTV.com shareholders, no more than 10% is reserved in the creditor trust for contingent compensation of LeTV.com shareholders.

  How did Jia Yueting take the lead from LeEco and embark on the road of making cars, becoming the laughing stock of "returning to China next week"? Can the 280,000 investors waiting hard wait for the legendary compensation?

Jia Yueting issued an open letter apologizing. Picture from Jia Yueting public account

Jia Yueting builds a car and is suffocated by dreams

  Jia Yueting's road to carmaking dates back to 6 years ago.

  At that time, LeTV occupied the first place in the field of online video and TV, and LeTV mobile phones also gained popularity with high cost performance, but Jia Yueting was obviously not satisfied. On December 9, 2014, Jia Yueting said on his personal Weibo that the automotive industry is facing a huge revolution in the era of the mobile Internet, and LeEco wants to build the best Internet smart cars.

  In order to enter the automotive industry, Jia Yueting personally went to the United States for several months to investigate. After returning from the inspection, Jia Yueting officially launched the layout of LeTV's automotive ecology, and also invested personal funds in the car manufacturing business. This move is also considered to show "the determination to break through."

  For LeTV's leap from consumer electronics to automobiles, there are doubts both inside and outside the company: For a heavy asset industry such as automobile manufacturing, can LeTV's funds sustain? In this regard, Jia Yueting publicly stated in 2015, "Even if the listed company is dragged down, I will not turn back."

  For the huge amount of investment required by various businesses, Jia Yueting is very confident in his financing ability. "I always think that capital is not a problem. As long as the strategy is forward-looking, leading enough, the product is subversive enough, and there is enough user value, as long as your organizational capabilities are sufficient. Strong, as long as you can get things done, funds will naturally follow." Jia Yueting once said in an interview.

  At most, Jia Yueting had three car licenses-LeEco, Faraday Future, and American electric car company lucidmotors. In 2016, Jia Yueting had revealed that LeEco had invested more than 15 billion yuan.

  In just a few years, the "car-making dream" really dragged down LeTV. In November 2016, Jia Yueting admitted in his internal letter that there was a problem with LeTV’s funding situation.

  But Jia Yueting's car-building pace did not stop there. On January 3, 2017, LeTV Super Cars and its strategic partner Faraday Future released its first mass-produced car FF91 in Las Vegas in the United States, but soon there was a bigger problem in the capital chain of the LeTV system.

FF91 undergoing alpine test. Picture from Jia Yueting public account

  As of May 2017, LeEco caused a large number of layoffs due to the tight capital chain, and the seven ecological businesses contracted across the board. Two months later, Jia Yueting left LeTV's mess and fled the United States to help Faraday complete the financing as soon as possible.

  Before leaving, Jia Yueting used his wrists and dreams to bring in Sun Hongbin, a fellow fellow from Shanxi, and his 15 billion yuan investment. It was only after taking over that Sun Hongbin knew how much LeTV’s debt was hot, and at the performance meeting in September 2017, he burst into tears and felt "willing to gamble and lose".

  In March 2018, Sunac's 2017 performance report showed that the gambling lost 16.5 billion yuan, which is about the five-year profit of Sunac China. Sun Hongbin, who had barely retired after being the chairman of LeTV for 200 days, said, "LeTV is a failed investment, with a loss of 16.5 billion. The accrual is zero. This is not a broken arm, but a broken head."

  But at this time Jia Yueting had already gone far to the United States and began Faraday's future car-making "career". "Jia Yueting" became synonymous with Lao Lai, and "returning to China next week" became a laughing stock.

  In the past three years, Faraday wants to achieve mass production of FF91 in the future, but the company is facing a large funding gap. After the LeTV campaign, Jia Yueting has owed a large amount of unpaid debts, leaving Faraday potential investors uncertain.

  In order to get rid of debt disputes, accelerate equity financing. On October 14, 2019, Jia Yueting applied for personal bankruptcy reorganization in the United States. According to the plan, Jia Yueting will put all his assets in the United States into the creditor trust, and the most valuable and most valuable asset of this part is Faraday Future.

  However, FF91, which was unveiled three years ago, has not yet been mass-produced, and Jia Yueting has achieved "golden cicada shelling" through personal bankruptcy and reorganization. In his own words, "this means a restart of life."

"Bankruptcy in the US does not mean being debt-free"

  The news of the completion of Jia Yueting's personal bankruptcy and reorganization process, LeTV's stock price, which has entered the delisting period, has opened a limit for several times on July 2, and the volume of stock turnover on July 2 reached 138 million yuan.

  But LeTV's response was cold. On the evening of July 2nd, LeTV issued a clarification announcement that the company had not received any relevant shareholder compensation plans or arrangements from Jia Yueting; the company could not judge whether future LeTV shareholders could apply for compensation to Jia Yueting, nor could it determine the reserved trust Assets may compensate LeTV's shareholders.

Data map: Jia Yueting.

  Does Jia Yueting's personal bankruptcy mean that he can be "little debt-free" in the future? In this regard, Jiang Zhenxiang, vice chairman of the Bijie Lawyers Association, told CNN reporter that the approval of the bankruptcy plan does not mean that its debt will disappear naturally.

  "Jia Yueting went bankrupt in the United States, and domestic creditors and stockholders can still claim their claims, and there is currently no law in China that allows individuals to forgive debts through bankruptcy. Individuals who file for bankruptcy in the United States cannot exempt their domestic debts. Of creditors can still claim their rights based on the relevant credit certificate."

  Jiang Zhenxiang also said that Jia Yueting’s filing for bankruptcy in the United States does not affect the identity of his domestic dishonesty. "Unless it has paid off all the debts paid by the court's judgment, or reached an enforcement settlement with the executor and fulfilled its obligations under the enforcement settlement agreement."

How much compensation can LeTV shareholders get?

  No matter how Jia Yueting "painted the cake" in the open letter, 280,000 LeTV netizens suffered heavy losses are indisputable facts. In May 2015, LeTV's stock price once reached a high of 179.03 yuan, but after Jia Yueting's "East Window Incident", it collapsed.

  On June 5, 2020, LeTV officially entered the delisting period, and the stock abbreviation was changed to "LeTV retreat". As of July 2nd, 18 daily limits have been harvested, and the closing price on the 2nd was 0.26 yuan. The market value of LeTV also dropped from 170 billion yuan to 1.037 billion yuan, which is more than 99% lower than the historical high.

  How much compensation can investors get?

  The bankruptcy plan shows that Jia Yueting’s creditor trust assets currently have the most valuable 10% Faraday Future equity. However, the value of equity continues to change with the value of the company. At the end of 2018, Faraday’s future valuation is 2.5 billion US dollars, and the value of the 10% trust assets is 250 million US dollars. However, by May 2019, the fair market price of FF equity estimated by BEAR About US$1.9 billion, the value of this part of the trust has shrunk to US$190 million.

  Other assets have also shrunk to varying degrees. For example, its frozen US$220 million equity is calculated based on the market value at the time of the freeze. As of the close of July 2, the market value of LeTV is only 1.037 billion yuan, and the value of the 23.07% equity held by Jia Yueting is only about 240 million yuan.

The market value of LeTV is only 1.04 billion yuan. Data from: Wind

  It should also be noted that Jia Yueting’s frozen assets must be included in the trust after the completion of the Chinese judicial process, and industry insiders said that according to Jia Yueting’s current debt situation, it is difficult to have a surplus in the end.

  Even if the above circumstances are not considered, it is still not easy for LeTV stockholders to get compensation from Jia Yueting, because all of this has a premise: the success of FF.

  Jia Yueting said in the open letter that FF's IPO plan is in full swing and is currently making good progress. "We are planning to hope to complete the IPO project quickly in the short term, laying a solid foundation for the future development of FF and allowing FF to achieve greater success."

  But Faraday's future status quo is not optimistic. The documents submitted to the court by Jia Yueting in early 2020 showed that as of December 31, 2018, Faraday Future’s cash and restricted cash totaled only US$7.4 million, and the working capital deficit was US$579.1 million. As of July 31, 2019, the company had accumulated losses of US$2.15 billion and liabilities of US$801 million.

  Cui Dongshu, secretary general of the Passenger Car Market Information Joint Committee, believes that whether Jia Yueting can start a business again depends on the financing effect, followed by observing the market acceptance of the product. There are still many uncertainties.

Screenshot of Sina Weibo.

  For the "compensation" that Jia Yueting is still a short check, LeTV investors do not buy it.

  On July 2, the Weibo account "LeTV Rights Defending Team" jointly established by 145 investors said after Jia Yueting wrote, "I (Jia Yueting) cashed in at a high level of 12 billion yuan, and two people wanted to send us. "

  Jia Yueting wrote in the letter: Once again, thank you for your understanding, support and trust, so that I can have the opportunity to restart my life, honor my promise, and also allow me to "walk" on the way home.

  Quotation marks have been added to "step on" here, can Jia Yueting's "return to the country next week" come true? Will hundreds of thousands of investors wait for nothing? These answers can only be revealed by Jia Yueting himself. (Finish)