(Yicai Global) March 23 -- Chinese shared-bike brand Xiaoming faces bankruptcy following a court judgment calling on the firm's operator to refund all user deposits.
Guangzhou Intermediate People's Court has called on Guangzhou Yueqi Information Technology Co. to return all user deposits, Chinese news outlet National Business Daily reported, adding that the company is unable to make the payments and faces liquidation.
The case represents the country's first public interest litigation in the bike-sharing sector. Xiaoming ceased operations on March 9, the firm's legal representative Guan Yue said before the court. The previously collected approximately CNY800 million in user deposits, from over 4 million users. It has refunded 80 percent of deposits up to now, though the deposits of 700,000 users remain outstanding.
The court ruled that Guangzhou Yueqi, should return the deposits to consumers as promised and issue an apology. If the firm is unable to return deposits, it should temporarily stop charging deposits for new users. The defendant must also disclose to consumers the accurate and complete relevant details of its safety mechanisms for consumer deposits.
The defendant's attorney disclosed that Guangzhou Yueqi faced a winding-up order from users on March 9, indicating that the firm is unable to return user deposits.