The completion of its debt restructuring through the Chapter 15 process means Luckin Coffee has turned a significant corner in rebuilding its business and could pave the way for the company to be relisted on the stock market
A Luckin Coffee store in Wuhan, China | Photo credit: via Shutterstock
Luckin Coffee is no longer subject to bankruptcy or insolvency proceedings in any jurisdiction, the company has announced.
According to a press release, no objections were filed against a motion for the Chinese coffee chain to close its Chapter 15 bankruptcy case in the US, with the Bankruptcy Court granting the request on 8 April 2022.
“Today marks a new beginning for Luckin Coffee,” said Dr. Jinyi Guo, Chairman and CEO of Luckin Coffee. “Luckin Coffee utilised the Chapter 15 process to effectuate the restructuring of its financial indebtedness in the United States. As we have emerged from this process successfully with the support of our creditors, we are confident that Luckin Coffee is well positioned for long-term growth and creation of stakeholder value.”
Luckin Coffee filed for Chapter 15 bankruptcy
in the US in February 2021 to restructure its debts and financial obligations.
Chapter 15 Bankruptcy enables foreign companies with assets in multiple countries to file for bankruptcy through the US court system to protect the interests of creditors and maximise the value of a debtors’ assets.
In an improvement of fortunes for the coffee chain that was rocked by financial scandal
in 2020, in March 2022, Luckin Coffee reported a 97.5% rise in annual revenues to RMB 7.8bn ($1.2bn).
The technology-led coffee chain also recorded a significantly reduced operational loss of RMB 539m ($85m) for the year compared to RMB 2.6bn ($406m) in 2020.
Luckin Coffee now operates more than 6,000 stores across China, of which approximately 4,400 are company operated with the remainder under license.
Luckin Coffee was delisted from the Nasdaq in 2020 but the completion of the bankruptcy proceedings could pave the way for the chain to relist on the stock market.