According to "Fortune" Beijing time on December 27 reported that the media reports on the eco-financial issues of music as prolonged, prompting creditors to take measures earlier this year, competing for the music as the remaining ecological assets.
Jiayue Pavilion
Shaun Wu, a lawyer in Hong Kong, China, specializes in resolving disputes among parties involved in Sino-foreign joint ventures, said: 'Creditors feel they must act quickly and actively defend their interests in China. Willing to wait patiently for problems to be resolved. '
Felix Tao of Shandong Province also clearly remembers his excitement when he received one of his largest order amounts: Lending 1.6 million Yuan to LeTV Mobile, the mobile phone business unit of LeTV Ecology Parts.
But after about two years, Felix still has not received the payment for the music as he moves, he said. "The music ecology constantly tells us that it will take some time for them to grace. We have heard such rhetoric many times."
The ecosystem of Tesco, Tesla and Netflix, which vowed to become China, has evolved into an out of order competition for cash and assets, a case study of the imperfect bankruptcy of Chinese companies.
This has a wide impact on China's ability to dispose of debt, and an imperfect bankruptcy system has left China's insolvent enterprises able to operate leisurely and carefreely with little or no pressure for restructuring.
In theory, the Chinese bankruptcy law, which came into force in 2007, is almost identical to the United States and Europe, but in practice enterprises are more willing to settle the debt issue through informal channels rather than go bankrupt.
There are very few companies filing for bankruptcy in China
In theory, creditors can force a bankruptcy if it can prove that a firm is out of date and can not afford to pay it, but it is difficult in China because creditors often do not have a complete picture of the finances of the business.
Although the report shows that the music business of the listed music industry lost RMB 637 million yuan in the first half of this year and the cash reserve was about to run out, the music ecology still showed a normal business operation. In the meantime, Jia Youting went to Hong Kong to finance the future venture capital of Faraday in the United States .
This month, the Chinese Supreme Court included Jiayuenting in the list of 'Lao Lai' and Beijing Securities Regulatory Bureau ordered Jia to give directions to explain the issues related to the music network debt.
Chinese enterprises have a high level of debt
After the enterprise is unable to repay its debts, its outcome is often not a smooth reorganization, but evolved into a disorderly contention for the cash and assets of the debtor. After the revelation of the eco-financing issue, about 10 creditors took over the office building of the company and demanded that management To ensure that their debt can be repaid.
Music as ecological not comment.
The possibility of creditors recovering their investments has become even more complicated by the strange phenomenon of Chinese corporate finance: the pledge of CEO equity.
The use of personal stock pledge loans is commonplace in China, and according to the Bank of America, 10% of the market value of A shares is used to pledge loans.
Founders often lend pledges to companies, and their finances are quickly confused with founders, but because Chinese law does not allow individuals to go bankrupt, investors with an insolvent debt have a great incentive to avoid Such behavior.
Han Chuanhua, a bankruptcy attorney in Beijing, said: "A private company may not be immune to personal insolvency because a private company may become bankrupt due to the high personal debt of the chairman. In such a case, the individual may at any cost Avoid bankruptcy.
So creditors are forced to take other steps to save their investment, such as the implementation of the founder's assets.
In the case of LeTV Ecology, Jia Youting and his sister Jia Yuefang have pledged almost all of the music-related shares held for loans, and his brother, Jia Yuemin, also pledged a stake in a related company for loans.
In early July, the Shanghai Higher People's Court froze more than 180 million U.S. dollars worth of assets by the Gu Yueting couple and Jia Yueting, on the ground of not repaying loans. A few weeks later, a Beijing court froze Jia Youting's other assets worth 33.78 million U.S. dollars.
On Monday, China Securities Regulatory Commission ordered Jia to return home to answer questions related to the absence of interest-free loans such as providing loans to Letv Network. This undoubtedly serves as yet another evidence that Jia Yueting is intertwined with his personal finance and LeTV ecosystem.
Jiayue Ting did not comment on this.
Felix Tao said that a few months ago, Music Mobile's employees no longer took his call at all.He stayed four months at LeTV Eco's corporate headquarters in Beijing in the hope of recovering the payment.Recently, Ecology Beijing headquarters hall supported a tent, hoping to force LeTV ecology to give him a statement, but he did not get it.
Felix Tao said, "Letv Eco ignored us and hired us to stop us from entering the lobby."