21 September 2021
Carey Olsen advises Ad Hoc Group of bondholders in 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 filing of a scheme of arrangement in the Cayman Islands Grand Court in the ongoing restructuring of Luckin Coffee Inc.
It was announced in March 2021 that the AHG members, who hold the majority of the US$460 million convertible senior notes that Luckin Coffee issued in January 2020, had entered into a restructuring support agreement ("RSA") with the Chinese coffee chain. As part of the RSA, the restructuring was intended to be implemented by way of a scheme of arrangement in the Cayman Islands Grand Court once certain milestones had been achieved. The filing of the scheme commences the formal Court process for the implementation of the restructuring of the notes set out in the RSA.
The Carey Olsen team advising the AHG on the Cayman Islands legal and regulatory aspects of the restructuring and the scheme petition comprised partner Jan Golaszewski, senior associates Tim Baildam and Jenna Willis, and associate Jasmin Davies, in conjunction with Quinn Emanuel Urquhart & Sullivan and Daniel Bayfield QC of South Square Chambers.
Luckin Coffee was founded in 2017 and was listed on the Nasdaq in June 2019. In April 2020, the Company announced the discovery of an internal fraud that had inflated its sales revenue by up to US$310m. Working alongside lead counsel Quinn Emanuel Urquhart & Sullivan throughout, Carey Olsen has also previously acted for the AHG in securing a US$160m worldwide freezing injunction issued ex parte by the Cayman Islands Grand Court against Luckin Coffee, and in relation to the provisional liquidation of Luckin Coffee following the appointment of Alexander Lawson and Wing Sze Tiffany Wong of Alvarez & Marsal as Joint Provisional Liquidators over the Company in July 2021.
Jan said: "The filing of the scheme of arrangement in the Cayman Islands Grand Court is the next important step in securing the best possible result for our clients in what continues to be a particularly complex and fast moving process."
Based on the latest holdings reported to Luckin Coffee, the aggregate principal amount of the existing notes held by the noteholders party to the RSA is well above the voting threshold of 75% in amount that is required to approve a scheme of arrangement under Cayman Islands law.