WM Motor says ‘pre-restructuring’ does not mean bankruptcy, denies founder fled overseas
WM Motor has denied reports that its founder Freeman Shen has fled to the US, leaving behind nearly RMB 40 billion in investments and debts.
(Image credit: CnEVPost)
Financially troubled Chinese electric vehicle (EV) startup WM Motor filed for a so-called “pre-restructuring” last week, and recent rumors have suggested that its founder has fled to the US to escape a massive debt. Now the company has clarified.
WM Motor has not filed for bankruptcy, and is currently in the pre-restructuring phase accepted by the Shanghai No. 3 Intermediate People’s Court, it said in a statement posted on Weibo today.
Pre-restructuring, unlike bankruptcy restructuring, is an act of self-help at an early stage when a company is facing difficulties, WM Motor said, adding that the move is aimed at avoiding bankruptcy and achieving a rebirth by restructuring debt and bringing in strategic investors.
WM Motor appeared on China’s national enterprise bankruptcy information disclosure platform last week, sparking widespread discussion about the company’s bankruptcy.
On October 10, WM Motor said in a statement that the company still has commercial value and some of its creditors are willing to reorganize, so the company submitted a pre-restructuring application to the Shanghai No. 3 Intermediate People’s Court.
WM Motor is not going to fall on its face and hopes to save itself by realigning its strategy and resolving its debt issues, the company said last week.
On October 12, several owners complained that WM Motor’s mobile apps suspended services, preventing them from using functions including Bluetooth keys. The company fixed this the next day and apologized.
On October 16, several local media outlets reported that WM Motor founder, chairman, and CEO Freeman Shen fled overseas under the guise of attending the Munich auto show in Germany, and then flew to New York in the United States, leaving behind up to nearly RMB 40 billion ($5.5 billion) in investments and debts, as well as unpaid employees.
Shen has not been seen at the WM Motor office since this year’s Chinese New Year, and his family has previously relocated to the US, one of the reports said.
In the announcement today, WM Motor denied the allegations that Shen had fled overseas, and said reports that the company had previously raised RMB 40 billion were also inaccurate.
“Freeman Shen, the company’s founder, went to the US in 1991 and has worked and lived in various places in Europe and the US for many years. His recent work focus has been on overseas matters, so there is no such thing as the company’s founder fleeing overseas,” WM Motor said.
WM Motor’s current priorities include after-sales service, resumption of production, export business, overseas cooperation, international financing and the introduction of strategic investors, it said, adding that some progress has been made in these matters and it will look for appropriate time to make announcements.
The information rumored on the Internet that WM Motor had raised RMB 40 billion was untrue, with most reports confusing the amount of financing with the amount of debts as well as liabilities, it said.
WM Motor’s core positions are operating normally, and some apps did have anomalies after China’s National Day, and the company set up an emergency response team to solve the problems and resume normal use within 48 hours, it said.
($1 = RMB 7.3079)
