Court ruling involving US$262m worth of assets hits Cotti Coffee founder

Former Luckin Coffee Chairman and Cotti Coffee founder Lu Zhengyao is tied up in a court ruling involving more than 1.89 billion yuan (US$262 million).

TianYanCha.com, China's top business data site, claimed that Lu, along with Cotti co-founder Li Huan, was the subject of a Beijing Fourth Intermediate People's Court ruling.

It indicates that the duo's assets totaling over 1.89 billion yuan are part of judicial processes, which will be auctioned, transferred or sold off.

No other information was shared.

Lu also founded Ucar, a car rental company. He was ordered to limit his spending earlier this year.

Limited spending is a judicial tool for dealing with those who do not pay their bills on time as ordered by the court.

Li was a stockholder in Ucar and joined Lu in establishing Cotti in 2022.

According to another business data information portal Qichacha, Ucar's investment arrangements and share buyback agreement with local venture capital investment firms were subject to several case rulings.

Lu was removed by shareholders in 2020 after Nasdaq delisted Luckin due to a sales falsification controversy. He returned in late 2022 with a new firm, pursuing a low-cost strategy in the competitive domestic coffee industry.

Cotti Coffee said on Monday that the court decision will not affect its day-to-day operations.

Consumers are concerned that this will have an impact on Cotti's discounts, which now place Americano and latte at roughly 8.8 yuan.

Cotti's number of new store openings has also gone down since its peak time in the first part of last year when it launched around 1,500 new outlets in one month.

According to Canyan Data, Luckin has almost 17,800 stores in China as of early March, outnumbering Starbucks' 7,770 locations and Cotti's over 6,800.