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Ofo denies bankruptcy, claims all is well

By Tan Xinyu | chinadaily.com.cn | Updated: 2019-04-03 15:31
Bike-sharing startup has denied it's bankrupt. [Photo/IC]

Chinese startup Ofo has denied it is bankrupt, and claimed all is well at the bike-sharing company in a statement released on Tuesday.

According to media reports, Beijing Baikeluoke Technology Co, one of Ofo's operators, was involved in a bankruptcy case on March 25, listed on the national bankruptcy disclosure platform.

Ofo, however, insists it is not bankrupt, saying that its debt-related litigation and negotiations are still underway.

The company has been suffering financial problems for the past few months, with tens of millions of users waiting for refunds since the second half of last year.

To compound matters for the company, unpaid bills resulted in several lawsuits in the same period.

CEO Dai Wei has been blacklisted by government for not fulfilling payment obligations and barred from excessive spending.

In an internal letter in December Dai claimed that his company is under huge pressure stemming from cash flow issues, refunds, repaying suppliers, and maintenance costs.

Han Xiao, a lawyer with Beijing Kangda Law Firm, told International Financial News that if a creditor tries to pursue the bankruptcy of its debtor, they need to go through legal procedures, including providing proof relating to the claim and insolvency of the company.

On the other hand Han said, if Ofo can show its ability to pay debts, it could withdraw the bankruptcy application.

Zhang Yi, chief analyst at consultancy firm iiMedia Research, told the paper he's optimistic for Ofo, saying continuing with warmer weather, the company should attract increasing numbers of users, compared with the cold winter months.

International Financial News cited data showing the number of active users on Mobike and Ofo exceeded 20 million in February.

Mobike and Ofo sharing bikes wait for riders on the street on July 22, 2018. [Photo/IC]

Mobike announced Friday that it will raise its riding fees in Beijing – one yuan for 15 minutes and 0.5 yuan for each additional 15 minutes – with the new fees coming into place next Monday.

The move comes after Bluegogo's fee increase in Beijing from March 21, where the company cut riding time for a one yuan from one hour to 15 minutes, with each additional 15 minutes costing 0.5 yuan.

Zhang Shule, an industry commentator, told Changjiang Times that price raises will not bother users.

Zhang said, as a niche market, the industry still has room to adjust prices.

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