Banks pursue Luckin Coffee chairman's assets after loan default

Luckin Coffee

22/05/2020 08:31

By Scott Murdoch
    HONG KONG, May 22 (Reuters) - The banks that lent $518
million to Luckin Coffee  LK.O  Chairman Charles Zhengyao Lu
have started court proceedings to liquidate his private company,
a government gazette for the British Virgin Islands showed.
    The notice, published on Thursday and reproduced in Hong
Kong media on Friday, names Credit Suisse as the security agent,
which means it will act on behalf of the banks behind the loan.
A court hearing will be held on the island of Tortola on June 8.
    Credit Suisse  CSGN.S  has proposed Grant Thornton be
appointed as liquidators of Haode Investments Co., Mr Lu's
private company, which is registered in the Virgin Islands.
    Credit Suisse declined to comment. Luckin did not respond to
calls or an emailed request for comment.
    The banks behind the loan https://www.reuters.com/article/us-luckin-coffee-investigation-chairman/luckin-coffee-chairman-defaults-on-loan-surrenders-company-shares-idUSKBN21O21R
 are Credit Suisse, Goldman Sachs  GS.N , Morgan Stanley  MS.N ,
Barclays  BARC.L , China International Capital Corporation and
Haitong International Securities  0665.HK , people familiar with
the matter have said.
    Luckin's fortunes have crashed since an internal probe
showed much of its 2019 sales were fabricated and overestimated
by 2.2 billion yuan ($309 million). Haode then defaulted on the
loan that had been secured by millions of Luckin shares.
    The creditors seized control of the Luckin shares owned by
Haode and used as collateral, a notice published by Goldman
Sachs on April 6 said.
    Goldman Sachs had been appointed to oversee the stock's sale
but Luckin had been suspended from trading on the Nasdaq for
more than a month until Wednesday night.
    Luckin was told by the Nasdaq on Tuesday its shares would be
delisted because of "public concerns" over the company.
    Luckin said it would appeal the ruling and remain a listed
stock until a decision is made, expected within two months.
    Its Nasdaq-listed shares have cratered from a peak of $50.02
in January to the close of $2.01 on Thursday.
 ($1 = 7.1291 Chinese yuan)

 (Reporting by Scott Murdoch in Hong Kong, Sophie Yu in Beijing;
Editing by Himani Sarkar)
 ((Scott.Murdoch@thomsonreuters.com;))