John Han and Chris Cogburn, Kobre & Kim (Photo: Courtesy Photo)

The judgment bloodhounds at Kobre & Kim are at it again, this time closing in on Chinese billionaire/ electric vehicle pioneer Jia Yueting.

On Sept. 3, Yueting resigned as CEO of the California-based EV startup he founded, Faraday Future, to become the company's "chief product and user officer" (whatever that is). His replacement is a former BMW executive.

Not so long ago, Faraday announced bold plans to open a billion-dollar factory in Nevada and produce a luxury electric SUV called the FF91. But the once-golden company (per CNET) "has in the past few years fallen from grace. The FF 91 electric car is well past schedule for production and countless financial woes have set the company back."

When Kobre & Kim's Chris Cogburn  and John Han got wind of Jia's move, it set off alarm bells. That's because Jia allegedly failed to pay their client Shanghai Lan Cai Asset Management Co, Ltd., or SLC, a multimillion dollar judgment after he lost an arbitration in China. The entrepreneur's stake in Faraday is one of his major U.S. assets, and the Kobre team needed to make sure it didn't slip out of reach.

Jenna Greene"We were concerned that that the gambit could make the assets immune," said Cogburn. "There was a lot of urgency."

The underlying case (from where I sit) is not even remotely interesting—something about an unpaid loan that Jia supposedly guaranteed involving a company he co-owned in China. The point is, a Beijing Arbitration Commission tribunal in 2018 found that Jia was jointly and severally liable for the debt.

Per the Kobre lawyers and co-counsel from Walker Stevens Cannom, Jia—who is now reported to live in 7,800 square-foot mansion near Los Angeles with sweeping ocean views—has yet to pay a cent. On behalf of SLC, they filed suit against him in U.S. District Court for the Central District of California to enforce the judgment.

Jia fought back, retaining a team from Latham & Watkins led by partner Daniel Schecter. The lawyers argued that SLC was seeking to enforce rights that it contracted away to another party, and that two cases are pending in China that could be game changers.

"At a minimum, this case should not proceed while those cases are pending. This is a dispute entirely between Chinese parties, arising out of contracts executed in China and governed by the substantive law of China," Schecter wrote.

However, Jia and the Latham lawyers parted ways on Aug. 28, not long after Jia allegedly failed to appear for a deposition on August 14. Native Chinese-speaking Kobre & Kim lawyers from Hong Kong were already on a flight to L.A. when Jia cancelled. 

Schecter declined comment.

On Sept. 3, O'Melveny & Myers partner Carlos Manuel Lazatin and William Pao entered notices of appearance for Jia.

In the meantime, the Kobre team struck. They won a preliminary injunction on Sept. 3 from U.S. District Judge S. James Otero in the Central District of California that bars Jia from "taking any step to transfer, conceal, reduce, encumber, or otherwise make unavailable—either personally or through instructions to another" any assets that could be used to pay the judgment.

One issue: Apparently Kobre's clients are not Jia's only creditors. He "is a chronic judgment debtor whose personal liabilities stretch well into the hundreds of millions of dollars," Cogburn wrote. "Jia has personal indebtedness in China believed to exceed $500 million, causing him to be included on the Chinese government's 'Discredited Persons' list used to track and enforce consumption restrictions on the country's worst debt defaulters."

But Kobre's clients seem to be at the front of the line in California.

In issuing the preliminary injunction, Otero wrote, "Respondent Jia's record of paying creditors is poor at best. …  Aside from his lack of compliance with this court's judgment, respondent also has not posted a supersedeas bond to stay execution of the judgment. In these circumstances, there is little doubt that petitioner will continue to suffer irreparable harm—including the loss of a judgment to which it is rightfully entitled—in the absence of preliminary injunctive relief."