Chinese billionaire businessman, Jia Yueting who started the Faraday Future, an electric vehicle startup has filed for bankruptcy.
The entrepreneur ran up billions of dollars in personal debts trying to build a business empire in China according to Bloomberg report.
Jia filed for bankruptcy in the United States with plans to turn over Faraday Future to creditors.
In a proposed debt-restructuring plan filed in federal court in Wilmington, Delaware, Jia will use his ownership stake in Los Angeles-based Faraday & Future Inc. 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 structured to ensure the startup goes to IPO by putting together “equity financing efforts,” according to the statement on the website.
Faraday is trying to develop an electric vehicle for sale in the U.S. and China. The company recently hired Carsten Breitfeld, BMW AG veteran, to take over the chief executive officer role from Jia.
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.
The case according to Bloomberg is In re Yueting Jia, 19-12220, US Bankruptcy Court, District of Delaware (Wilmington).