Jia Yueting, an entrepreneur who ran up billions of dollars in personal debts trying to build a business empire in China, has filed for bankruptcy in the U.S. with plans to turn over his latest venture, an electric vehicle startup, to creditors.
In a proposed debt-restructuring plan filed in federal court in Wilmington, Del., Jia will use his ownership stake in Los Angeles-based Faraday Future to set up a creditor trust to repay his debts.
Jia faces $2.3 billion in claims, according to the plan. In a statement on Faraday’s website, the company said Jia’s debts were owed to creditors in China.
The plan is also designed to help Faraday put together “equity financing efforts and prepare for an IPO,” according to the statement. The company's statement also said Jia's filing will not affect its normal business operations.
Faraday is trying to develop an electric vehicle for sale in the U.S. and China. The company recently hired Carsten Breitfeld, BMW Group veteran, to take over the CEO role from Jia, who will remain chief product & user officer.
Faraday won a much-needed cash infusion when it formed a joint venture earlier this year with The9 Ltd., the Chinese online-gaming company. A unit of China Evergrande Group, the property developer owned by Hui Ka Yan, China’s third-richest man, pursued a $2 billion investment last year, that failed.