Luckin’s Lenders Win Court Order to Wind Down Chairman’s Assets

Lenders led by Credit Suisse Group AG have won a court order seeking to wind down entities controlled by the family of Luckin Coffee Inc. Chairman Lu Zhengyao as they try to recover $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 Meyer to drop 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.

Luckin’s Lenders Win Court Order to Wind Down Chairman’s Assets

“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.

The lenders in September provided a $533 million loan facility secured by Luckin Coffee shares. They were also seeking a court order in the British Virgin Islands to appoint liquidators for Haode Investment Inc., which is controlled by Lu’s family trust.

Banks including Credit Suisse and Morgan Stanley raised about $210 million over the past two months selling Luckin shares that Lu had pledged as collateral, people familiar with the matter said, and still face a $300 million shortfall on margin loans to the founder.

Luckin and Credit Suisse did not immediately return calls seeking comment.

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