Luckin Coffee Files For Bankruptcy Protection In The U.S.

On January 8, Luckin Coffee issued a statement on its official website stating that the company’s board of directors has established an independent committee to investigate the allegations made by some employees against Chairman and CEO Guo Jinyi in a joint letter. The committee will be composed of a joint liquidator and two independent non-executive directors of the company. In addition, the statement also stated that Guo Jinyi has denied all the allegations in the joint letter.
It was reported on January 6 that the seven vice presidents, general managers and executives of all branches of Ruixing Coffee signed a joint letter to collectively request the removal of Ruixing Coffee’s current chairman and CEO Guo Jinyi.
The recipients of the joint letter were Luckin’s board of directors and Luckin’s controlling shareholder, Dazheng Capital. The letter stated that the current chairman and CEO Guo Jinyi was “unworthy and incompetent” and the company was on the verge of survival. However, it is worth noting that although the list of signing the joint letter is as long as dozens of people, the names of Ruixing Coffee’s core management personnel have not appeared. The signatories are mainly the heads of the regions and the heads of the city branches.
Soon after the joint letter was published, Guo Jinyi also responded internally, saying that he had immediately asked the board of directors to set up an investigation team to investigate the incident. “Since I took office, I have a clear conscience. “. At the same time, Guo Jinyi also stated that “the report letter was drafted by Lu Zhengyao and Qian Zhiya on January 3, and some of the employees involved were unsure of the truth and were coerced and signed.”
Since Luckin Coffee’s “explosion” due to financial fraud in April 2020, the company’s management has experienced many rounds of turbulence. Former chairman Lu Zhengyao and former CEO Qian Zhiya have both resigned. In July 2020, in the company’s board of directors infighting, former Lu Zhengyao assistant Guo Jinyi came to power as chairman and CEO. He was once considered a figure of Lu Zhengyao’s faction.
According to public information, Guo Jinyi joined Lu Zhengyao’s “Shenzhou Department” in 2016, serving as the chairman of UCAR and also serving as Lu Zhengyao’s assistant. At the beginning of Luckin Coffee’s establishment, Guo Jinyi crossed the border from UCAR to Luckin Coffee and served as the senior vice president responsible for product and supply chain.
Since Ruixing Coffee was exposed to fraud in April 2020, the company has experienced a series of turmoil, such as delisting, litigation, management turmoil, and fines from regulatory agencies, and will gradually resume normal operations by the end of 2020. But just as the outside world believed that Ruixing Coffee would embark on a stage of standardized operation and steady growth, the company was once again involved in the scandal of infighting.
Regarding this internal dispute, the board of directors of Ruixing Coffee also emphasized that the allegations made by multiple employees in the joint letter have nothing to do with the behavior disclosed on April 2, 2020 (referring to financial fraud), and that the alleged behavior has an impact on the company’s finances. The data has no significant impact.
According to the latest financial data disclosed by Luckin Coffee, Luckin Coffee’s single-quarter revenue in the third quarter of 2020 increased by 35.8% year-on-year, and as of November 2020, more than 60% of the stores have achieved positive profits.