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Dec. 18 (NBD) -- A federal U.S. district judge in California has temporarily frozen Faraday Future (FF) CEO Jia Yueting's 33 percent ownership stake in the company, and put a protective order on his four mansions in California, according to new court documents filed last Thursday.

The frozen assets were valued at over 1.5 billion U.S. dollars combined. It's noted that it's the second freeze placed on Jia's ownership stake in the electric car startup and his mansions in California have been used as collaterals for loans many times.

The new freeze came as a result of a lawsuit filed earlier last week in the central district court of California by Shanghai Lan Cai Asset Management Co, Ltd (SLC).

SLC claimed that it lent 50 million yuan (7.3 million U.S. dollars) to LeTV Sports Culture Development (Beijing) Co. Limited (LeTV) in December 2016 and the principal should have been repaid in a single lump-sum at the conclusion of a 12-month term.

However, LeTV defaulted on its debt. As joint warrantors, Jia and TV Plus Holdings (Beijing) Limited (TV Plus), only paid two months' interests, leaving a lot unattended.

As a result, SLC brought the case to arbitration at the Beijing Arbitration Commission, which ruled in January this year that Jia's side should repay a total of 80 million yuan (11.6 million U.S. dollars) to SLC.

However, having been lived in the U.S. since 2017, Jia neither paid SLC nor indicated any intention to do so in the near future. So SLC finally decided to sue Jia in the U.S. federal court. 

It's worth noting that at least three other Chinese creditors have filed suit against Jia in the U.S.

On December 5 of this year, the Eastern Caribbean Supreme Court ruled in favor of To-Win Capital, allowing the creditor to proceed with freezing Jia's shareholdings in Faraday Future through his nominee and various layers of offshore holding companies.

In September of this year, Shanghai Qichengyueming Investment Partnership Enterprise (Limited Partnership) also filed suit against Jia in a district court of California in the hope of enforcing an arbitration decision made in China.

A lawyer for corporate law told NBD that seeking arbitration recognition belongs to international judicial assistance. In accordance with Chinese laws, the frozen assets such as real property and stocks can be used to pay debt. But it is hard to enforce the arbitration made in China.

However, if American court grants permission to enforce the Chinese arbitration award for SLC and To-Win Capital, Jia's stake in FF is set to be eroded, endangering his control over the electric car startup.

Email: tanyuhan@nbd.com.cn