Faraday Backer Files for Bankruptcy

He's racked up a mind-blowing $2 billion in debts.

The founder of secretive electric vehicle startup Faraday reportedly declared bankruptcy in the U.S. after running up more than $2 billion in debts.

Bloomberg, citing court documents filed in Delaware, reports that under a debt restructuring plan, Jia Yueting plans to turn over his stake in the EV company to his creditors in China.

Jia, the founder of a sprawling Chinese tech company, emerged as the primary backer of Faraday as it rapidly — and quietly — grew from startup to a hundreds-strong staff in Los Angeles that purported to be preparing a challenge to Tesla for electric vehicle supremacy.

He took over as CEO in late 2017, after the company had rolled out an underwhelming prototype, announced plans for a $1 billion factory in Nevada and set a timetable to make its first cars. Its ambitions, however, were rapidly scaled back amid questions about its finances.

The company scrapped the Nevada plant for a smaller operation in California, then burned through hundreds of millions invested under a new partnership.

Most recently, the company formed a joint venture with a Chinese gaming company for another infusion of cash, and replaced Jia as its chief executive.

Jia’s creditors reportedly hope to be reimbursed — at least in part — with the proceeds from an initial public offering, although the filing conceded that might not raise as much as the company hopes, due to, Jia's filing said, “negative press.”