Faraday Future founder files for Chapter 11 bankruptcy

The move is part of a larger restructuring plan, and it could prepare the startup for its IPO.

Faraday Future founder Jia Yueting has filed for Chapter 11 bankruptcy in a bid to settle his exorbitant personal debts. The move is part of a larger recovery plan, and it's meant, in part, to regain credibility for Faraday Future. Though there's no guarantee that it will help.

In the proposed plan, Yueting will use his ownership stake in the long-troubled, cash-strapped EV startup Faraday Future to create a creditor trust and repay his debts. That's not a total surprise. Last month, Yueting stepped down as CEO in order to create this trust. According to Faraday Future, the restructuring will not affect the company's normal business offerings, and in fact, it will help prepare the startup for an IPO.

According to The Verge, Yueting claims he owes somewhere around $3.6 billion to more than 100 creditors -- mostly due to LeEco, the tech conglomerate he founded in China. Ninety percent of the people or business Yueting owes money will have to approve the restructuring plan by November 8th. If they do, they will also be agreeing to release Yueting of all personal liability and drop their claims against him.

Yueting is expected to continue working with Faraday Future as Chief Product and User Officer, a role in which he'll handle product definition, user experience and AI.