15 December 2021

Carey Olsen advises Ad Hoc Group of bondholders as Cayman Islands Grand Court sanctions Luckin Coffee scheme of arrangement

Carey Olsen has acted as Cayman Islands counsel to an Ad Hoc Group of bondholders (AHG) in relation to the Cayman Islands Grand Court's sanctioning of the scheme of arrangement (the Scheme) proposed by Luckin Coffee Inc. in the Chinese coffee chain's ongoing restructuring.

The sanctioning of the Scheme had the support of the Chinese coffee chain's Joint Provisional Liquidators, Alexander Lawson and Wing Sze Tiffany Wong of Alvarez & Marsal, and is the latest and close to final stage in the restructuring of Luckin Coffee's US$460 million 0.75% convertible senior notes due 2025.

The Scheme had already secured the unanimous approval of all attending creditors at the Scheme meeting in Grand Cayman, Cayman Islands on 30 November. The 56 creditors in attendance represented approximately 97.7% in aggregate outstanding principal amount of the convertible senior notes.

The Carey Olsen team advising the AHG on the Cayman Islands legal and regulatory aspects of the sanctioning of the Scheme comprised partner Jan Golaszewski and senior associates Tim Baildam, Ashleigh Dixon and Jenna Willis, in conjunction with Quinn Emanuel Urquhart & Sullivan and Daniel Bayfield QC of South Square Chambers.

Jan said: "The sanctioning of the Scheme of Arrangement in the Cayman Islands Grand Court is the end result of many months of hard work and is the close to final step in securing the best possible financial result for our clients in the restructuring."

Luckin Coffee was founded in 2017 and was listed on the Nasdaq in June 2019. In April 2020, it announced the discovery of an internal fraud that had inflated sales revenue by up to US$310 million. Working alongside lead counsel Quinn Emanuel Urquhart & Sullivan, Carey Olsen has acted for the AHG throughout the proceedings, including the securing of a US$160 million worldwide freezing injunction issued ex parte by the Cayman Islands Grand Court against Luckin Coffee (in May 2020), the provisional liquidation following the appointment of the Joint Provisional Liquidators in July 2020, and the negotiation and establishment of a restructuring support agreement between the Company and the AHG (which was signed in March 2021).

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