Luckin’s Ex-Chairman Lu Zhengyao Becomes Judgment Debtor for Third Time, Faces $188 Million Fine

Luzhengyao
(Source: ifeng)

According to public information posted to China’s enforcement information disclosure website, Luckin Coffee’s ex-chairman Lu Zhengyao on Wednesday was listed as a judgment debtor by the Higher People’s Court of Beijing Municipality, obliging him to pay about 1.2 billion yuan ($188 million) in fines.

This is the third time that Lu has been declared a judgment debtor this year. In January, the prominent businessman was forced by the No. 4 Intermediate People’s Court of Beijing Municipality to pay 1.367 billion yuan ($214 million). In March, he was ordered to pay 936 million yuan ($167 million) by the Higher People’s Court of Beijing Municipality.

After graduating from college, Lu embarked on a diverse career of entrepreneurship by starting a slew of businesses, subsequently propelling him to become one of the 500 richest people in China.

In December of last year, Luckin Coffee, a major Starbucks competitor in the Chinese market, was ordered to pay $180 million in fines for overstating its 2019 net revenue and understating its losses. In February, the Beijing-based coffee chain filed for Chapter 15 bankruptcy protection in New York.

After resigning as the chairman of the board in July last year, Lu joined forces with former partners from Luckin Coffee, including former CEO Qian Zhiya, Vice President Li Jun and Vice President Zhou Bin, by launching a new brand of noodle restaurants in early April, calling it “the last battle” of his life.

SEE ALSO: Luckin’s Ex-Chairman Charles Lu Launches a New Venture: Chain Restaurants

Shejian Technology, which Lu founded in January, is set to open its first set of noodle restaurants under the brand name of Qu Xiaomian, and will adopt a more prudent expansion strategy than the much more ambitious model notoriously pursued by Luckin. “Noodles are just the beginning. In the future, there will be multiple sub-categories such as braised pork rice,” an employee of Shejian Technology told Chinese media outlet Tech Planet.

CAR Inc., which Lu founded in 2007, went public on the Hong Kong Stock Exchange in 2014. However, the company was delisted from National Equities Exchange and Quotations in March for failure to disclose its 2019 financial report.

In 2020, Lu resigned as a chairman and non-executive director of the ride-hailing startup UCar. The company’s total revenue in 2020 reached 6.124 billion yuan ($959 million), down 20.4% year-on-year. Due to the mandatory acquisition of Indigo Glamour Company Ltd., UCar announced it would be delisted from Hong Kong Stock Exchange on July 8. Cao Guangyu, CFO of UCar, once expressed that “the accounting fraud of Luckin Coffee directly leads to our difficulty of financing at present”.