A Case Study on Corporate Debt Restructuring of Luckin Coffee

Youjing Zhang ()
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Youjing Zhang: Northeastern University, School of Business Administration

A chapter in Proceedings of the 2024 3rd International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2024), 2024, pp 284-291 from Springer

Abstract: Abstract Amidst a global economic slowdown and escalating trade tensions, corporate debt issues are intensifying, leading to a growing number of enterprises facing financial distress and implementing debt restructuring. This paper employs a case study approach combined with financial indicator analysis, focusing on Luckin Coffee as the subject. Through debt restructuring, Luckin Coffee successfully returned to normal operations, achieving a win-win outcome for both the company and its creditors. Drawing on theories of debt restructuring and debt crises, this study thoroughly analyses the motivation and financial consequences of Luckin Coffee’s debt restructuring. The study presents several key conclusions: the internal and external motivations include the impact of the pandemic on the global coffee market, poor sales performance and high costs, the problems with expansion pace and initial expansion model, and the default on notes; financial effects are observed in the improvement of the company’s financial indicators, including solvency, profitability, operating capacity, growth capacity, and cash flow conditions. This study contributes to the body of research on debt restructuring and offers valuable guidance for similar enterprises facing comparable challenges.

Keywords: Corporate Debt Restructuring; Debt Crises; Financial Indicator Analysis; Luckin Coffee (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-548-5_31

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DOI: 10.2991/978-94-6463-548-5_31

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