Gionee has officially declared themselves as bankrupt and has filed for bankruptcy in China. The company is in a debt of around $3 billion to their 648 creditors. Huaxing Bank had filed a petition in the court for consolidating all the related assets of the company. Shenzen based court has now accepted the liquidation of the company. Apart from their creditors, Gionee has reportedly not paid their ad agencies or suppliers either.
Though amidst bankruptcy, a report submitted by lawyers to IFENG, a Chinese news platform, suggests that the bankruptcy can be turned into reorganization. Previously, company had brought in a team of reconstructing consultants to blueprint a plan for the reorganization.
In an interview with Securities Times, Liu Lirong, Gionee’s Chairman and Chief Executive, admitted that Gionee’s total debts amount to 17 billion yuan, with 10 billion yuan of this owed to banks, 5 billion yuan to their suppliers and about 2 billion to advertising agencies. The company actually went to bankruptcy when Lirong lost around 1 billion yuan, which totals to around $144 million, in a gambling bet in a Saipan-based casino in Hong Kong. However, local news has reported it as 10 billion yuan ($1.44 billion), which could be the actual figure that company may have refused to disclose. This added more fuel to what was already in the fall.
Founded in 2002, Gionee was one of the leading smartphone brands in India and China. It was even the 6th best selling smartphone brand in China, in 2016. It started its ride off the cliff when suppliers refused to supply parts as they were not being paid, last year. Notably, the last smartphones launched under the brand in India were back in April of this year. Gionee India’s CEO and Managing Director Arvind Vohra stepped down in August 2017. David Chang, Global Sales Director for Gionee, then started leading the India operations.
Just a while back, Arvind Vohra and Karbonn Mobiles’ promoter Pradeep Jain have agreed acquire a 75 percent of company’s India operations. The deal is said to be worth Rs. 200-250 crores, while the Gionee India operations are said to be worth Rs. 125 crorers.