Ofo Says 'Hogwash' to Bankruptcy Reorganization Rumors
Benedict Armour
/SOURCE : Yicai

(Yicai Global) Nov. 9 -- Beijing bike sharer Ofo dissed a rumor Nov. 1 that it is preparing its bankruptcy reorganization as nonsense, claiming the company is still up and running. Ofo founder and Chief Executive Dai Wei conceded at an internal meeting the company was experiencing its "darkest hour" and he would let anyone who would not fight to the end get up and leave, even as the company sought to dispel the rumor, online news media Sina reported.

A big equity broker has begun to prepare the bankruptcy reorganization as trustee for the 4-year-old bike sharing company, an insider earlier told state media The Paper. Ofo's debt six months ago was USD935 million, with user deposits USD532 million and supply chain of USD144 million, per the report based on Ofo's balance sheet. The reorganization is a voluntary negotiated act that needs no court-based mediation, but it must get the consent of all creditors to be binding. It can be worked out without resort to court, said a Beijing lawyer. Ofo's suppliers may have sued the company since otherwise it would not be able to file for bankruptcy liquidation, he said. The equity broker acting as trustee should have completed its due diligence and asset appraisal and it can rely on this to reorganize the company or seek a buyer.

Tech titan Alibaba funded Ofo with over USD700 million in July last year, public data shows. It twice pledged its shares as collateral in March for Alibaba's loan, making the Hangzhou-based tech giant an Ofo shareholder as well as a creditor. The legal representative of Ofo's operating company -- Dongxia Datong Management and Consulting -- changed from Dai Wei to Chen Zhengjiang on Oct. 22. The change was only a normal personnel change within the company, Ofo later called it in an official statement. Dai was still the company's controller and the change will not affect the company's operations, it added. Chen is one of the top five staffers at Ofo.

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Keywords: Ofo. Mobike