What Happened: Luckin's lenders, led by Credit Suisse, have won a court order to recover debt owed to them by the company, according to a filing in a Cayman Islands court.
The court has sought the winding down of Primus Investments Fund and Mayer Investments Fund, both of which hold Luckin shares and are owned by the family of Luckin Chairman Lu Zhengyao.
The court order signed by Grand Court Judge Raj Parker said the petitioner has established that the debtors have failed to pay a substantial debt, where the realizable assets lie in the unmortgaged ADSs in the company, which has seen its share price plummet and faces the risk of Nasdaq delisting.
"The orders are to include a provision that the Joint Official Liquidators may take action against the General Partners of the Debtors (if necessary) and, in respect of Primus, to require provision of share certificates from third partners," Parker said in the ruling.
The lenders extended $533 million in loans, secured by Luckin's shares, in September 2019.
The lenders sold $210 million in pledged stock over the past two months and have yet to recover the remainder of the loan, Bloomberg said, citing people familiar with the matter.
Chairman, Directors On The Way Out? Luckin is scheduled to hold an extraordinary general meeting July 5, with the company proposing to pass resolutions to oust the chairman of the company as well as directors, including Sean Shao, David Li and Erhai Liu, the Wall Street Journal reported.
Luckin is planning to add two independent directors as it sets about putting its house in order and restoring investor confidence.
The coffee retailer was rocked by the unearthing of financial improprieties in early April that resulted in a steep slide in shares as well as a temporary trading halt.
At last check, Luckin shares were slipping 15.47% to $3.23.