A few weeks ago, we did report that popular Chinese phone maker Gionee was on the verge of bankruptcy, a development that could be attributed to the loss of over 10 billion Chinese yuan (more than $1.4 billion approximately) by Liu Lirong, the company’s chairman and founder, while gambling at a casino located in Saipan.
The worst, however, may have happened when news broke hours ago that Gionee has officially gone bankrupt. A Shenzhen court has approved the application for liquidation bankruptcy submitted by Huaxing Bank. Owing to the fact that the embattled smartphone maker hired restructuring consultants last week, this could still become a company re-organization.
Despite this latest dismal development, Lirong feels the company can turn around its fortunes within 3 to 5 years. But Gionee owes 648 creditors a total sum of CNY 20.2 billion (about $3 billion) and nearly 50% of this figure was borrowed from banks. At the start of 2018, the company couldn’t pay suppliers, and advert agencies are yet to be paid also.
The financial downturn of Gionee spiraled out of control when its founder was rumored to have lost more than 10 billion Chinese yuan while betting in a casino. But he debunked the rumor, conceding that he only lost 1 Billion yuan which is a whopping $144million!
He further stated that he didn’t use company money, adding he may have “borrowed company funds”. Liu Lirong says Gionee was experiencing losses that were about 100 million Chinese yuan (around$14.4 million) in one month in 2013 – 2015. And the losses incurred in a month doubled in the past 2 years.