(Yicai) Oct. 18 -- WM Motor, once one of China’s most promising electric car startups, has not filed for bankruptcy but is in a pre-restructuring phase, the firm said, adding that its founder Shen Hui is not deliberately staying overseas.

A Shanghai court is handling the company’s pre-restructuring, not a bankruptcy case, the Shanghai-based firm said today. This is a way of taking early action to avoid insolvency by restructuring debts and introducing strategic investors, it added.

WM Motor has filed for bankruptcy, according to information posted on corporate data platform Tianyancha last week. Later, several media outlets reported that WM Motor’s vehicle operating system, mobile phone app and Bluetooth key were all not working.

Some of the apps on the cars’ operating system were having issues after the National Day holiday earlier this month, so the company set up an emergency team which solved the problem within 48 hours and normal services were quickly resumed, WM Motor said.

Shen has worked and lived in many places in Europe and the US over the years and he is not staying abroad on purpose, WM Motor said, in response to rumors that Shen said he was going on business trips to Munich and New York. Shen is focusing on overseas business these days, it added.

WM Motor, which counts SAIC Motor, Tencent Holdings and Baidu among its backers, has not received financing of CNY40 billion (USD5.5 billion), it said, without specifying how much it has received. The amount of money raised has been declared in a previous IPO prospectus, it added.

WM Motors, which has not delivered a single car this year, was one of the first electric car startups in China to achieve mass production and deliveries and ranked second in the country behind Nio in 2019, with shipments of 16,900 units.

But the carmaker fell behind competitors due to poor management and falling sales. Last year, the company delivered fewer than 30,000 vehicles, according to data from the China Passenger Car Association. Since the second half of 2022, it has cut salaries, shut assembly lines, gone into rent arrears on its headquarter’s building and seen many dealers walk away.

Plans to raise financing through a stock market flotation did not materialize. WM Motor had planned to go public in Hong Kong next January via a reverse merger with a unit of Apollo Future Mobility Group. But the latter pulled out on Sept. 8, citing a number of reasons such as global stock market turbulence, geopolitical conflicts and financial market uncertainty. WM Motor also failed to list in 2022.

Last month, used car dealer Kaixin Auto Holdings signed a non-binding agreement to acquire privately held WM Motor through a new share issue.

Editor: Kim Taylor