FF founder Jia Yueting (Photo/VCG)

Oct. 15 (NBD) – China's heavily indebted tech mogul Jia Yueting, founder of electric-vehicle startup Faraday Future (FF), filed for Chapter 11 bankruptcy and restructuring in the U.S. on Sunday, according to an announcement released by Jia's team on Monday.

Under the restructuring plan, Jia will establish a creditor trust to receive all of his equity interest and personal assets in the U.S. to help pay back the debts. The trust will be controlled and managed by a committee of creditors and a trustee. 

Jia still needs creditors to vote for this restructuring plan by November 8. In signing on to the plan, creditors have to agree to release Jia (and his wife) of all personal liability on all claims in every jurisdiction.

If the restructuring plan was finished, Jia would no longer hold any equity in FF owner Smart King Ltd and would return to China for FF's further expansion. Carsten Breitfeld, FF's current Global Chief Executive Officer, said that in that case, the actual controller of FF will be changed from Jia to the whole partnership committee.

"Filing for bankruptcy is aimed at satisfying Jia's myriad debts and offering equal opportunities to all creditors to get repaid," revealed the announcement.

National Business Daily (NBD) noticed that over 90 percent of Jia's debts are those he guaranteed for his business in China, a streaming company dubbed LeTV. So far, Jia has repaid debts of over 3 billion U.S. dollars while another 2 billion U.S. dollars is still outstanding.

However, some held that Jia Yueting's new move in the U.S. might be unable to solve his debt issues in China. 

Wu Lijun, a laywer at Orient Cambridge Law Firm, told NBD that Jia aspires to keep creditors' hopes up via the new measure, but whether the restructuring plan could be carried out will still depend on the business operation of FF.

Jia is seeking to obtain debt reliefs and lessen his repayment pressure in China through the bankruptcy in the U.S., analyzed Wang Huaitao, a lawyer at Thinkoo Law Firm. But even if the application for bankruptcy was passed in the U.S., it doesn't mean Jia could be exempted from debts in China, Wang added.

Moreover, with regard to the influence of Jia's new move on FF, the startup claimed that it won't affect FF's operation and could be even deemed as a feel-good factor as the restructuring plan would not only address Jia's remaining debts but possibly accelerate FF's fund raising.

According to Breitfeld, FF is expected to complete a new round of financing by the first quarter of 2020. In addition, the electric vehicle firm will file for IPO in 12-15 months, Breitfeld added, before which it needs capital of 850 million U.S. dollars to stay afloat. 

Email: lansuying@nbd.com.cn