(Yicai Global) Nov. 26 -- Gionee Communication Equipment will go through restructuring since its Chairman and Chief Executive Liu Lirong has lost his available funds that could potentially save the cash-strapped firm to gambling, according to a shareholder who spoke to Chinese online news outlet Jiemian.

Liu gambled and lost CNY2 billion (USD288 million) during his first visit to Saipan, part of the US in the Western Pacific, and despite friends' objection, went again later to play while accumulating losses of CNY10 billion in total, Jiemian reported last week. The Shenzhen-based company refuted the report. Liu had his assets frozen earlier allegedly due to gambling debts accrued in Macao.

About 20 of Gionee's suppliers urged Shenzhen Intermediate People's Court to order the handset maker to restructure due to unpaid bills. The company came up with preliminary plans for repayment and reorganization on Nov. 23. 

Gionee has faced tough competition from Chinese phone firms including Huawei Technologies, Oppo Electronics and Vivo Communication Technology, and the pinch has been aggravated by slower sales. Handset sales have fallen almost 12 percent in the third quarter, according to official data. 

Gionee's gross debt rose to CNY28.2 billion (USD4.1 billion) by the end of last year, according to its suppliers. Its assets were CNY20.1 billion (USD2.9 billion).

After Gionee's two original equipment manufacturer deals with local companies fell through, it can hardly pay for its factory workers food and lodging expenses, an insider with a pseudonym of Chen Gang told Yicai Global earlier this month. The company already fired about half of its staff at its main factory in Dongguan in April.

In January, Dongguan's district court froze Liu Lirong's assets, including his 41 percent stake in the firm. The reason may be related to gambling, Yicai Global reported on Jan. 16.  

Editor: Emmi Laine