The dirt of financial crisis that LeEco has been badly trying to sweep under the carpet for last two months is slowly getting its way out. A smartphone component maker, in a recent case, has dragged the Chinese smartphone maker to court for allegedly unpaid bills.
Haosheng Electronic Technology, a partner in LeEco’s smartphone ecosystem that makes audio components, speakers etc, has filed for arbitration in a local trade court against LeEco to recover $5 million or close to 52 million Yuan that has remained unpaid for years.
Though this is a small amount, not able to pay up even this small amount speaks volumes about the company’s current crisis.
In September last year Haosheng had stopped supplying components to LeEco as there was a pending amount of close to 30 million Yuan, however both the companies had devised a payment plan in November wherein LeEco would pay up the component maker all the debt plus 6% interest in nine installments.
The smartphone maker, however, failed to pay up even the first installment leading to this legal action by Haosheng. By this time, the debt has reached over 51 million Yuan.
The case has been filed in Shanghai International Economy and Trade Arbitration Commission and the local trade court has accepted the arbitration claim, a Chinese media reported.
Haosheng’s case may be the first arbitration case against LeEco but it is expected that it would trigger others to follow suit as there are hundred such partners who LeEco owe payment.
Compal, its manufacturing partner – globally as well as in India, for example, is waiting for its payment of around $300 million, though the Taiwanese firm has not yet sought legal recourse to recover its dues.
Besides its smartphone ecosystem, the flamboyant phone maker also has dues unpaid towards some media organisation related to advertising. Last year a Hong Kong based newspaper had sued LeEco for $69,000 for the same. Sources say the company owes some advertising fees to few Indian media houses that has not been paid for last one year.
In November, last year, LeEco’s Chairman Jia Yueting had accepted that the company is going through a cash crunch because of its lavish expansions across markets, including India and the US, as well as into multiple domains, like smartphones, movies and electric cars.