The latest development of Luckin Coffee's financial fraud debt Rui Lucky's class action case with shareholders was approved by an American judge.
Ruixing's "big debt trouble" involving fraud due to financial fraud scandal is about to be solved_Ruixing's shareholder class action lawsuit has been approved by a US judge.
According to foreign media sources, a preliminary settlement agreement of $175 million has been reached in the class action lawsuit of Luckin Coffee shareholders. On Oct.25, Ruixing shareholders asked the U.S. court to approve a $175 million class action settlement agreement, which Manhattan District Judge John Cronan approved on Oct.26 and will hold a hearing on Jan.31,2022 to consider final approval, Reuters reported. The latest news shows that the settlement agreement still needs final approval from Manhattan District Judge John Cronan and the Cayman Islands court.
A lawyer for Ruixing shareholders said the all-cash settlement agreement filed on the evening of 25 local time was a "good result", referring to Ruixing's liquidation proceedings in the Cayman Islands and related protection applications filed under US bankruptcy law. The agreement also involves executives of Lucky, underwriters of the company's initial public offering of $645 million in 2019 and underwriters of subsequent American depositary shares.
Not long ago on the Mid-Autumn Night, Ruixing released three announcements, one of which was: Ruixing Coffee once again decided to spend $187.5 million (about 1.21228 billion yuan) to buy a settlement. Ruixing said it signed a $187.5 million letter of intent with the plaintiffs 'representatives in the U.S. class action lawsuit. The approval of Ruixing shareholder class action lawsuit by a U.S. judge also represented a reduction in the compensation amount from the original estimate of $187.5 million to $175 million.
Since last year's Muddy Water short Ruixing accused it of financial fraud, Ruixing admitted that after financial fraud, it faced an estimated 10 billion claims from insiders_American investors collective recovery, shareholder class action litigation and other issues. If Ruixing can successfully settle the class action case in January next year, it means that the fraud storm will be short for a while. Ruixing is expected to usher in a new life. The black horse of coffee industry_Ruixing Coffee may be reborn.
Once the world heard of fraud, lucky coffee paid a heavy price for it.
According to previous industry estimates, Ruixing faces about $11.2 billion in compensation, but now according to the preliminary settlement letter of intent, Ruixing only needs to pay a total of about Rmb2.4 billion, including $180 million paid by Ruixing to the SEC (about 1.17 billion yuan),$175 million paid to investors and related fines from China, etc. By contrast, only 2.4 billion yuan in compensation can now settle the "lucky storm" that has been fermenting for a year. In fact, it cannot be said to be a heavy price.
In the first half of this year, Ruixing's operating cash flow turned positive, and a number of financial report data performed well. Although Ruixing was still in a loss state in the first half of this year, it greatly narrowed the loss range. Looking back on Ruixing from its establishment to 2020, its net loss totaled more than 10.4 billion yuan, which can be said to be a considerable performance compared with the net loss of 210 million yuan in the first half of this year.
Ruixing can realize the cash flow to turn positive and comeback may be because Ruixing has changed its past crazy money-burning style and improved and perfected its product line, store operation, marketing strategy and other aspects. For example, the operation mode of stores has been adjusted from the original "lightning" mode to the mode of "fine operation creating profit", etc.
After the storm, Ruixing can still regroup on the right track is what many people did not expect. At present, Ruixing has passed the most difficult moment, but the settlement agreement has not been finally approved, and the losses are still continuing. It is unknown whether Ruixing can create new miracles in the future.
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