Harneys advises Luckin Coffee on its successful restructuring
Harneys acted as Cayman Islands counsel to Luckin Coffee Inc. (“Luckin Coffee”) in connection with provisional liquidation proceedings in the Cayman Islands and the holistic restructuring of Luckin Coffee’s liabilities, including:
- the restructuring of New York law governed US$460 million 0.75% convertible senior notes due 2025 by way of a scheme of arrangement in the Cayman Islands; and
- a US$175 million settlement of a U.S. Federal Class Action commenced by certain purchasers of the Company’s NASDAQ listed American Depositary Receipts.
Harneys were engaged in the early stages of the matter, advising on the regulatory investigations in relation to the fraud of former management as well as negotiating the terms of the restructuring and managing its implementation. Harneys worked seamlessly with Luckin Coffee’s suite of international advisors, including Houlihan Lokey and Davis Polk, in relation to all offshore aspects of negotiations with various stakeholders and third parties, including (i) the U.S. Securities and Exchange Commission, (ii) the State Administration of Foreign Exchange in the PRC, (iii) third party investors, (iv) an ad hoc group of note holders, and (v) multiple shareholder claimants.
This was an innovative and complex restructuring given that Luckin Coffee was balance-sheet solvent, but had difficulties around repayment due to illiquid onshore assets and foreign exchange restrictions in the PRC preventing the transfer of sufficient funds offshore.
The Harneys team was led in Asia by Chai Ridgers, Head of our global Restructuring practice and by Nick Hoffman, Managing Partner and Head of our Cayman Litigation, Insolvency and Restructuring team, with support from Partners Matt Taber and Jayson Woods, Senior Associates Anya Allen and Katherine McMenamin, and Hong Kong Banking & Finance and Corporate teams led, respectively, by Partners Paul Sephton and Raymond Ng, who were supported by Senior Legal Manager Nicholas Fong and Senior Associate Oswald Kan. Our Shanghai office provided support as well via the Managing Partner and Head of Shanghai Litigation, Restructuring and Insolvency, Vicky Lord, and Shanghai Counsel Jessie Xu. Mirza Manraj, Counsel and Head of Asia Regulatory practice, advised in relation to the financial crime and regulatory investigation matters.
Harneys has been at the forefront of the development and implementation of offshore jurisprudence in the field of restructuring and insolvency for decades and our Restructuring and Insolvency practice leads the offshore market in both global reach and expertise, having acted in most of the largest and most complex cross-border restructurings and insolvencies of recent times.