What’s new: Luckin Coffee Inc. said on Monday that a petition to wind up the disgraced chain had been dismissed, after it reached a deal with creditors to restructure $460 million in debt.
The erstwhile Starbucks China challenger said the Grand Court of the Cayman Islands had called off provisional liquidators, who were appointed in July 2020 after the petition was filed.
Courts appoint provisional liquidators to maintain the status quo at a company after a winding up petition is signed, for instance to stop its assets being squirreled away before a formal court-ordered liquidation.
Luckin said the court’s decision came after it reached a deal with its creditors to restructure the debt — in 0.75% convertible senior notes due 2025 — which was recognized by the U.S. Bankruptcy Court for the Southern District of New York.
The context: Luckin has been trying to put the 2.2 billion yuan ($348.7 million) financial fraud scandal revealed in 2020 in its rearview mirror, as it prepares to seek a U.S. relisting, Caixin reported previously.
After being delisted from the Nasdaq and paying $180 million to settle fraud charges in the U.S., the company has reshuffled its management team and pared 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 has sold more coffee at higher prices, eased off on its previously breakneck expansion and increasingly relied on the franchise model to raise profitability.
Related: Luckin Pays $180 Million to Settle U.S. Fraud Charges
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editors Joshua Dummer (joshuadummer@caixin.com) and Flynn Murphy (flynnmurphy@caixin.com)
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