LeEco has had a rough few months and getting sued by Vizio is perhaps the last thing the company needs right now. Not only is the Chinese tech company facing a cash-crunch that could ultimately lead to its demise, but its failed attempt to buy Vizio has now brought on two lawsuits by the US TV maker - one claiming $60 million in damages and the other seeking $50 million.
Last year in July, LeEco had announced a deal to buy Vizio for $2 billion, one which would have helped the Chinese company gain a strong foothold in North America. But the cash-strapped company in April called off the deal citing "regulatory headwinds." However, LeEco was required to pay $100 million as a buyers termination fee, which it failed to complete and reportedly only managed to hand over only $40 million. Vizio now seeks the remaining $60 million as damages, The Verge reports.
Vizio also contradicted what the companies had cited in April and instead alleges that at the time of the announcement, LeEco's financial meltdown had already begun and that the company tried to hide the fact by announcing such deals that would create an optimistic facade. The lawsuit also claims that LeEco announced the merger as a means to gain access to Vizio's corporate customer database for its own purpose.
In the second, $50-million lawsuit, Vizio is targeting one of LeEco's subsidiaries, Le Technology, which is based in California.
For those trying to keep up with LeEco's turmoil, here's a quick recap. In December the company's then CEO Jia Yueting admitted in a letter to employees that the company was facing a cash-crunch. The next month, LeEco would get a $2.2 billion investment from property developer Sunac China Holdings which was seen as a lifeline that could perhaps save the company.
Following the announcement to drop the bid to acquire Vizio, LeEco in May announced that it was laying off 70 percent of its US staff, or 325 jobs, which was perhaps the final nail in the coffin as far as the company's dream to enter the US market goes. Jia also stepped down as CEO that same month and earlier this month he resigned as chairman of its main listed unit. Some of LeEco's linked assets were also frozen, and most recently, startup Faraday Future, which is backed by Jia, announced that it would move production of its luxury electric SUV from a $1 billion factory that was planned for Nevada.