China's heavily indebted businessman Jia Yueting, founder of Faraday Future (FF), filed for bankruptcy and restructuring under Chapter 11 of the Bankruptcy Code in the U.S. on Sunday, Jia's Debt Project Team said.
A creditor trust, to be controlled and managed by a committee of creditors and a trustee, will be established. Jia will transfer all equity and economic interests in FF owned by him to the trust in order to repay creditors, according to a statement the team posted on its Sina Weibo account on Monday.
After the completion of his individual restructuring, Jia is expected to "go back to China and push forward and implement FF's dual home market strategy," the statement said. "This brings great impetus to FF's capital-raising efforts and planned future IPO, and it is particularly significant for the progress of FF's China business," it continued.
As FF founder and chief product and user officer, Jia will continue to lead the management team to achieve the company's strategic goals, so as to build up the value of trust assets to repay the creditors, the statement noted.
"This matter will not affect any of FF's normal business operations," FF said in a statement on the company's website on Sunday.
It said Jia's bankruptcy and restructuring will benefit FF in that they will help facilitate FF's equity financing efforts and prepare for a possible IPO, while his efforts to maximize the value of FF will benefit stakeholders.
"This filing for restructuring will not affect the ownership of employee stock options or shares in FF," the company said.
Over 90 percent of Jia's debts are debts he guaranteed for his businesses in China. As of today, Jia has repaid over $3 billion worth of debts, with the unpaid balance at around $3.6 billion, according to Jia's Debt Project Team.
Jia was listed on China's defaulters website after failing to pay Ping An Securities Group more than 470 million yuan ($66.5 million), according to a notice on the site of the No. 3 Intermediate People's Court of Beijing in December 2017.
