Luckin escapes liquidation after reaching debt restructuring agreement
What’s new: Cafe Luckin Inc. said monday that a petition to liquidate the disgraced chain had been rejected, after reaching an agreement with creditors to restructure a debt of 460 million dollars.
The former Starbucks China challenger says the Cayman Islands Grand Court overturned the interim liquidators, who were appointed in July 2020 after filing the petition.
Courts appoint provisional liquidators to maintain the status quo in a company after a petition for liquidation has been signed, for example to prevent its assets from being scattered before a formal court-ordered liquidation.
Luckin said the court’s decision came after it reached an agreement with its creditors to restructure the debt – into 0.75% convertible senior notes due 2025 – which was recognized by the US District Bankruptcy Court. southern New York.
The context: Luckin has tried to put the 2.2 billion yuan ($348.7 million) financial fraud scandal exposed in 2020 in his rearview mirror as he prepares to file for a U.S. relisting, Caixin previously reported.
After being delisted from the Nasdaq and pay $180 million to settle fraud charges in the United States, the company shuffled its management team and reduced its net loss in the first nine months of 2021 from 3.27 billion yuan a year earlier to 234.95 million yuan.
The company sold more coffee at higher prices, slowed its previously meteoric expansion, and increasingly relied on the franchise model to increase profitability.
Related: Luckin pays $180 million to settle US fraud charges
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