Caixin
Jun 11, 2020 07:48 PM
BUSINESS & TECH

Court Freezes Luckin Founder’s Direct Stake in Limousine Business

What’s new: The 10.05% of shares in limousine services provider Ucar Inc. held by Lu Zhengyao, founder of scandal-plagued coffee chain Luckin, have been frozen under order by a Beijing court, Ucar disclosed on Wednesday.

Lu’s holding of 270 million shares was frozen in two batches, one on April 9 and the other on April 28, with a restriction period of three years. Ucar did not disclose who requested the move, nor the reason for granting the order.

While Lu, who also goes by Charles Lu, directly holds 10.05% of Ucar’s shares, he exercises control over about 40% of the company through various other connected holdings.

What’s the background: Lu’s financial empire began to crumble in early April after Luckin first disclosed that nearly half of its reported revenue for the final three quarters of last year was fake.

Besides Luckin, two of Lu’s major holdings at the time were Ucar as well as rental car services provider Car Inc., which counted Ucar as its largest stakeholder.

But Ucar has announced plans to sell its entire stake in Car Inc. since the scandal broke, and earlier this week Lu stepped down as Car Inc.’s chairman and a member of its board.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full Caixin article in Chinese, click here.

Related: Luckin Founder’s Empire Unravels Further

Contact reporter Yang Ge (geyang@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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