Mainland media magnate Jia Yueting’s LeEco may be about to suffer another setback in its battle to climb out of a RMB 16.8 billion ($2.7 billion) debt hole, as a Hong Kong online streaming unit of the Beijing-based conglomerate is said to be shutting down operations this Friday, March 16th, after failing to pay rent on its office since May of last year, according to local press accounts.
LeSports, a sports streaming division of LeEco leases the 33rd and 35th floors of K Wah International’s The Octagon in Tsuen Wan, while Le Corporation takes up the 36th floor, according to local media reports. It was reported in the Hong Kong media last October that the pair of LeEco subsidiaries had failed to pay combined monthly rent of HK$1.04 million ($132,660) since May of last year, saddling the insolvent duo with an unpaid obligation of HK$10.4 million.
K Wah submitted a filing to Hong Kong’s Lands Tribunal in September to take back the three floors, and Le Corporation’s Hong Kong branch filed for liquidation in December.
End of a Short, Colorful Hong Kong Arc for LeEco
LeEco only established formal operations in Hong Kong in 2015, but the mainland firm known as the Netflix of China has already been the subject of numerous court cases in the territory.
In addition to its unpaid rent, LeSports has apparently not been keeping up payments to its network provider, resulting in Hong Kong subscribers not being able to watch three English Premier League matches on Monday and last Saturday which they had paid for.
Le Corporation has also been the subject of several legal cases in the city, including a $224,000 lawsuit over copyright fees initiated by film distributor Sundream Motion Pictures in December 2016, and a HK$530,000 ($67,700) claim by local newspaper Hong Kong Economic Times that same month, seeking outstanding advertising fees. Prior to that, a marketing firm also sued the LeEco subsidiary for HK$14 million ($1.8 million) in unpaid marketing fees in August 2016.
LeEco Stays in Crisis Mode
After shooting to prominence as one of China’s tech unicorns, Jia Yueting’s LeEco has been selling off real estate and other assets in the last two years, as it seeks to stay afloat.
In July last year, China Construction Bank successfully sued to freeze $37.2 million in assets belonging to Jia Yueting and LeEco in Beijing’s courts, and during the same month, China Merchants Bank had $182 million in assets held by Jia’s family and LeEco frozen by Shanghai courts.
After announcing plans of a California dream campus, LeEco last March sold off a 49 acre Silicon Valley site it had acquired for $250 million in 2016 to Chinese real estate developer Genzon Group for $260 million.
Sun Hongbin Won’t Ride to the Rescue
In January 2017 LeEco had apparently found a white knight when it received RMB 15 billion ($2.36 billion) in investment from Sun Hongbin, owner of Tianjin-based developer Sunac China. The property developer also provided another $270 million in loans to Leshi Internet and Leshi Zhixin, LeEco’s video streaming and television units in November.
However, by November of last year the Shenzhen Stock Exchange had sent a letter to LeEco, asking if the company was able to repay the loans provided by Sunac. Sun indicated in late January that he would not make further financial commitments to LeEco.