LeEco delays payroll until August due to ‘financial constraints’
Some LeEco employees in China will not get paid until August. According to an official statement provided to TechCrunch, Leshi Holdings, LeEco’s holding company has decided to postpone July’s payroll until August 10th. This is at least the third time this year LeEco has delayed paying some of its workers.
Right now, it seems only employees in China will not get a paycheck into August. Sources within LeEco say the company has not yet announced delaying paying US workers, though in the past it reportedly did so without telling employees. Gizmodo and Bloomberg point to two separate incidents where LeEco missed paying their workers on time in 2017.
The statement says that it has contacted the affected employees and guarantees full payment to individuals’ social insurance and housing fund.
LeEco is also now facing a $100M lawsuit from Vizio, the US-based TV maker it attempted to purchase. The lawsuit alleges Vizio executives mischaracterized the financial health of the company and intended to use the purchase to spin publicity and obtain records Vizio’s confidential customer data.
Today’s news is just another entry in the tale of LeEco’s downfall.
Over the last several months, LeEco started spiraling out of control. Deals fell through, workers were laid off and billions in recent investment couldn’t right the ship. In May the outspoken founder and CEO Jia “YT” Yueting resigned from his post as CEO from the publicly traded unit Leshi. Then, five days ago, he stepped down as Leshi’s Chairman. This came a day after news broke that a Shanghai court had, in response to unpaid loans, frozen more than $180 million in assets belong to himself, his wife and three LeEco affiliates.
“LeEco faces great challenges, and I will take on all the responsibility, I will persist in my duties until the end for the sake of our employees, users, customers and investors,” Jia wrote on Weibo, China’s Twitter.
Just yesterday news broke that Faraday Future, an electric vehicle company with ties to LeEco and Yueting, is scrapping plans to build a massive manufacturing facility in the Nevada desert.
At this point it seems LeEco is nearing the end of its life. The company was once called the Netflix of China and lead by a charismatic CEO who seemed intent on turning his company into a worldwide force almost overnight. It scaled too quickly, didn’t understand new markets and is now facing the consequences.
Contact Matt Burns at matt@techcrunch.com if you have any additional information regarding this story, LeEco or Faraday Future. All communication is confidential unless specified otherwise.