A court in China has reportedly accepted the application for liquidation bankruptcy by Huaxing Bank against Gionee.
Highlights:
- Gionee has reportedly entered bankruptcy
- The company was facing a cash crunch for some time now
- Gionee is said to owe around $3 billion to 648 creditors
Gionee has reportedly gone under and entered bankruptcy. GSMArena reports that a court in Shenzhen, China, has accepted the application for liquidation bankruptcy by Huaxing Bank against the smartphone manufacturer. However, there’s still a chance that this might turn into a reorganisation since Gionee is said to have hired restructuring consultants last week and its founder and Chairman, Liu Lirong, thinks that the company might get be able to get back in business in 3-5 years. However, this seems a bit of a stretch since the company is said to owe around $3 billion to 648 creditors and half of the amount to banks. The company has reportedly failed to pay suppliers and ad agencies.
Recently, a report pointed to company founder, Lirong, losing around CNY 1 billion while gambling. While the executive says he didn’t use company’s funds in the casino, he admitted that he might have “borrowed company funds”. This comes as a big blow to the company since it is said to have lost around CNY 100 million per month between 2013 and 2015. Gionee’s losses are said to have doubled in the last two years. The company was also facing a cash crunch and sold off its Indian arm to former Gionee India CEO and minority shareholder Arvind R Vohra, and promoters of handset maker Karbonn Mobile. It’s been a while since Gionee introduced any new phones in the Indian market. Back in April, the company launched its F205 and S11 Lite smartphones in the country.
Gionee entered India in 2012 and claims to have a customer base of 1.25 crore in the country, along with over 42,000 retail stores, and 600 exclusive service centres. The company’s devices are assembled at a Foxconn plant in Sri City, Andhra Pradesh. Last year, it also announced plans of investing Rs 500 crore in a new manufacturing/assembling unit in Faridabad, Haryana.
Related Reads:
Gionee F205, S11 Lite selfie-centric smartphones with 18:9 FullView display launched in India
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