Freeman Shen (Chinese name: Shen Hui), the founder and chairman of WM Motor, is reported to have flown to New York on October 16, using the excuse of attending the Munich Auto Show in Germany. He left behind nearly 40 billion yuan worth of investments and debts as well as unpaid salaries of WM Motor employees.
WM Motor is one of the earliest EV manufacturers in China, acquiring investments from firms such as Baidu and Tencent, with a total fundraising amount exceeding 41 billion yuan. However, WM Motor’s performance in the market has not been as expected. It attempted to go public three times, but all ended in failure.
An insider close to Freeman Shen revealed to Chinese media National Business Daily, that Shen is indeed no longer in China. Since the Spring Festival of 2023, he has not made any public appearances at the company, and his family had relocated to the United States. While the IP address displayed on Shen’s Weibo account still shows Beijing, it is believed that Shen has designated someone else to manage the account for him.
According to China’s National Enterprise Bankruptcy Reorganization Case Information Network, WM Motor has applied for bankruptcy reorganization. On October 10, WM Motor issued a notice letter through its official Weibo account stating that, considering the company still holds commercial value and potential for recovery, with a sound corporate governance structure in place and some creditors expressing willingness to participate in the reorganization, their pre-reorganization application has been accepted by the court.
SEE ALSO: WM Motor Applies for Bankruptcy Review
WM Motor was established in May 2012, with a registered capital of 6 billion yuan. According to publically disclosed risk information, the company has more than 20 instances where it is deemed a “judgment debtor”, with a total amount exceeding 100 million yuan to repay. In addition, the company and its holdings in multiple companies have been frozen, with a cumulative amount exceeding billions of yuan.
According to the IPO prospectus disclosed by WM Motor, its net loss attributable to shareholders in during 2019 to 2021 was RMB 4.445 billion, RMB 5.084 billion, and RMB 8.205 billion respectively, with a total loss of RMB 17.4 billion over the three years. By 2021, WM Motor had in effect become insolvent.
Faced with a huge funding gap, WM Motor has been seeking an IPO and has made three attempts, all of which failed.
However, WM Motor has not given up. According to the news from Kaixin Auto’s WeChat official account, on September 11th, Kaixin Auto Holdings announced signed a non-binding letter of intent for acquisition with WM Motor, which plans to issue a certain number of new shares to acquire 100% equity held by its shareholders.