Luckin Coffee’s lenders win court order to wind down chairman’s offshore assets

A Cayman Islands court issues order to wind down Primus Investments Fund and Mayer Investments Fund, which hold shares in Luckin Coffee

Lenders led by Credit Suisse has raised US$210 million from collateral, still short of US$300 million to recoup loan

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A Luckin Coffee store in Beijing, China in February 2019. An accounting scandal has led to a financial fallout for its key executives. Photo: Reuters

Published: 9:33am, 22 Jun 2020Updated: 9:32am, 22 Jun 2020

Lenders led by Credit Suisse have won a court order seeking to wind down entities controlled by the family of Luckin Coffee Chairman Lu Zhengyao as they try to recover US$324.1 million of outstanding debt, according to a Cayman Island court filing.

Judge Raj Parker will grant orders to liquidate two holdings – Primus Investments Fund and Mayer Investments Fund – which hold shares in Luckin and are ultimately controlled by the Lu family, according to the judgment delivered on June 16 in the Court of the Cayman Islands.

The court rejected a request by Primus and Mayer to dismiss the petition to allow them to repay the debts by refinancing or selling assets, saying there is no credible evidence that the debt will be paid within a reasonable time.

“There is no evidence to suggest that the debtors are in a position to meet their contractual commitments if the lenders were willing to forebear exercising their contractual rights,” the judge said in the filing.

Key executives including Jenny Qian Zhiya and Charles Zhengyao Lu celebrate the coffee chain’s Nasdaq listing day in May 2019. Photo: Reuters

Luckin Coffee, often viewed as China’s answer to Starbucks, last month fired its chief executive Jenny Qian Zhiya and chief operating officer Liu Jian after an internal investigation into fabricated transactions that roiled investors and undermined the trust in Chinese financial reporting.