China-based smartphone maker Coolpad is facing legal action after a bank reportedly sued one of its subsidiaries, demanding early repayment of a loan due in mid August.
Reuters reported that Coolpad – 29 per cent owned by Chinese conglomerate LeEco – is being sued by a Ping An bank branch. The bank is demanding the company’s subsidiary – Youlong Computer Communication Technology – pay back CNY80 million ($11.9 million), which was due to be repaid on 15 August.
The bank in question has called in the loan as the financial satiation of the guarantor – another Coolpad unit – had deteriorated, added Reuters.
The news adds to the woes of struggling content and devices firm LeEco, which is facing pressure from creditors and partners to pay off debts.
The cash strapped company saw its co-founder Jia Yueting resign as chairman last week, after a Shanghai court froze his personal assets earlier this month.
The court ruling followed the company’s failure to pay interest due on loans taken out to fund its ambitious expansion into smartphones.
Coolpad’s problems are also mounting. The company earlier this month again delayed the release of its 2016 financial results, citing outstanding audit issues.
The company was due to release its annual report in March, and trading of its shares have been suspended.