Completion of the Chapter 15 bankruptcy case is a milestone for Luckin Coffee as it seeks to normalise its business and could pave the wave for the company to relist its shares in the US
Luckin Coffee says it has significantly reduced its debt burden after completing provisional liquidation | Photo credit: via Shutterstock
Luckin Coffee has successfully completed provisional liquidation, with the company’s Chapter 15 bankruptcy case to be closed following the submission of a final report by Joint Provisional Liquidators.
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.
“Today’s announcement is the result of the remarkable work from the Luckin Coffee team and the outstanding support we have received from our creditors and stakeholders throughout this process,” said Dr. Jinyi Guo, Chairman and CEO, Luckin Coffee.
“The successful completion of the provisional liquidation is yet another positive step for Luckin Coffee and has allowed us to significantly reduce our debt burden and improve the company’s capital structure. Operating from a position of financial strength, we are focused on executing our growth strategy and continuing to deliver industry-leading services and products to our customers and long-term value for our shareholders.”
Luckin Coffee has been attempting to normalise its business since a $300m accounting scandal
was uncovered in 2020. According to an unconfirmed report in The Financial Times
, the Xiamen-based coffee chain is planning to relist its shares in the US, two years after being delisted from the Nasdaq.
In January 2021, Luckin investor Centurium Capital took a controlling stake
in the company after leading a consortium of investors to purchase shares from former Luckin Chairman Charles Lu and former CEO Jenny Qian.
Reporting its third quarter results
in December 2021, Luckin said it operated a total of 5,671 locations across China.
The coffee chain’s pioneering e-commerce strategy, which revolves around app-enabled delivery, pick-up and a nimble dark kitchen format, remains influential and has been adopted by coffee chains around the world seeking to adapt to the challenges of the pandemic.