More pressure piled on LeEco as CEO’s bank accounts and assets frozen

It’s no secret that LeEco is feeling the heat financially. The company is experiencing severe cash flow problems and had to halt its expansion plans, call off its acquisition of Vizio, pawn off some property, as well as lay off some staff in the U.S. Despite having received a cash injection of a couple of billion dollars from a property tycoon, it seems that LeEco is still in dire straights, so much so that a Shanghai bank has ordered the freezing of selected LeEco assets in response to receiving late payments on a loan.

According to Reuters, the bank involved, China Merchants Bank Co Ltd (CMB), loaned 10 billion Yuan (around $1.4 billion) to LeEco back in 2015 when things were rosier which went towards acquiring a stake in Coolpad. Thanks to repeated issues in receiving interest payments from Leview Mobile HK Limited, though, the bank had an order approved on June 26th to freeze 1.237 billion yuan ($182 million) of assets with ‘immediate effect‘ from a bunch of LeEco linked companies as well as from  LeEco’s CEO Jia and his wife. Luckily for LeEco, the bank says that it is willing to have ‘friendly talks‘ with the company to resolve the issues.

“A LeEco spokesman said the case concerned “financing loans related to LeEco’s smartphone business”, but added LeEco had enough collateral to cover the loan.”

This isn’t the only financial pressure being brought to bear on LeEco; Taiwan’s Compal Electronics Inc has both reduced shipments to the company and suspended its plans to buy shares of Leshi Zhixin, LeEco’s video, and tv subsidiary. In related news, electronics manufacturer Foxconn has rid itself of a 20% stake in the same subsidiary. Meanwhile, China Mobile is owed around 14 million yuan (just over $2 million) in late payments.

It’s becoming increasingly clearer that LeEco is struggling to meet its financial commitments and unless LeEco manages to raise more cash to right itself soon, more suppliers and partners will re-examine their relationship with the stricken firm.

Source: Reuters

About the Author: Peter Holden

He's been an Android fan ever since owning an HTC Hero, with the Dell Streak being his first phablet. He currently carries a Pixel 2 XL, Huawei P20 Pro, and a Huawei MediaPad M5 (8.4) in his pockets and thinks nothing of lugging a 17-inch laptop around in his backpack. When not immersed in the world of Android and gadgets, he's an avid sports fan, and like all South Africans, he loves a good Braai (BBQ).