(Yicai Global) Sept. 30 -- A stake of up to CNY1.6 billion (USD247.6 million) in UCar, a car platform set up by Luckin Coffee founder Charles Lu, was recently frozen by a Chinese court. Public information shows that the total amount of the company’s to have been frozen has now reached CNY11 billion (USD1.7 billion).

The Beijing No. 1 Intermediate People’s Court froze USD254.3 million of UCar’s equity over a legal dispute involving its unit Shenzhou Youche Fujian Information Technology, according to business information platform Tianyancha, which provided no reason for the freeze.

“In the process of litigation, when dealing with major business property and assets, interested parties generally apply for equity freezes to prevent the loss of assets,” Zhang Junyi, a partner of Oliver Wyman, told Yicai Global.

The situation of UCar’s integration is relatively complex, he said, with the major shareholder and the investment firm possibly having some dispute over equity. Another possible reason is reservation of stake during a lawsuit.

Lu founded Car in 2007. It later grew into China’s largest national car rental chain. Lu set up UCar in 2016, incorporating a range of businesses such as ride hailing and car rentals into the platform. UCar officially landed on the National Equities Exchange and Quotations, an over-the-counter market in Beijing, in July 2016 and was valued at CNY41.8 billion.

Lu later participated in the creation of coffee chain Luckin Coffee and became its actual controller. The Starbucks-wannabe went public in the United States in 2019 and was valued at as much as USD4.2 billion. Less than one year after the flotation, however, Luckin Coffee was caught up in a CNY2.2 billion financial fraud. This forced Lu to resign as chairman in July last year.

Luckin Coffee has now settled a USD187 million class-action lawsuit and returned to normal financial reporting, according to the firm’s statement released on Sept. 22, after being caught fabricating its sales figures.

Luckin Coffee’s scandal prompted a crash in share prices of UCar and Car, which was delisted from the NEEQ in March. UCar said in a filing last November that it intended to sell all of its 20.86 percent stake in Car to South Korean investment firm Indigo Glamour for HKD1.8 billion (USD278.6 million).

Editors: Zhang Yushuo, Peter Thomas