(Yicai) Sept. 2 -- The founder of Royole Technologies, Liu Zihong, is no longer chairman and chief executive of the bankrupt Chinese foldable smartphone developer, according to a former employee. He remains the firm’s largest shareholder.

After Liu drew public attention by being seen in the stands of the US Open Tennis Championships in New York on Aug. 30, a former Royole employee told Yicai that Liu had left the company and would not attend its first creditors' meeting on Sept. 13.

Due to the Shenzhen-based firm entering insolvency proceedings in May, he faces judicial measures, including restrictions on high consumption and exiting China once he returns.

Liu, 41, founded Royole in 2012 and owns almost 39 percent of the business. The firm debuted the world's first commercially available foldable smartphone in 2018. But due to losses incurred through high spending on research and development, the company hit the financial buffers at the end of 2020.

It has been in wage arrears for nearly 20 months now, in addition to some employee options, with the total amount exceeding CNY100 million (USD14.1 million), the ex-staffer said.

After Royole’s financial troubles began, Liu refused to go through the judicial process to resolve them, leading it into an even worse situation, the person said, adding this could be one reason why the administrators removed him from the company's management. 

Although Liu is in the United States, he may attend the first creditors' meeting online or through a lawyer, Deng Peiqi, director of the debt restructuring and pre-restructuring committee of the Guangdong Bankruptcy Administrators Association, said to Yicai.

Royole's bankruptcy reorganization will not be significantly impacted if Liu does not attend the meeting with the administrators, Deng pointed out. But a major shareholder and voter, Liu will have a hand in whether the draft reorganization plan gets passed or not, Deng added.

Editors: Dou Shicong, Martin Kadiev