Luckin Coffee Files for Bankruptcy in New York
What’s new: Luckin Coffee Inc.’s court-appointed liquidators filed for bankruptcy protection in New York on Friday, the company said.
The petition, filed under chapter 15 of title 11 of the U.S. Code, is part of Luckin’s attempts to salvage its business in China and will effectively quarantine the company, which admitted to wide-ranging accounting fraud last year, from lawsuits by U.S. creditors as it restructures.
Luckin said its thousands of stores in China would remain open for business, and that the filing is “not expected to materially impact ... day-to-day operations.”
The firm was continuing to pay employees, suppliers and vendors, it said.
The background: After revelations of its widespread accounting fraud sent shockwaves through markets last year, the formerly Nasdaq-listed startup entered bankruptcy restructuring in July when a court in the Cayman Islands, where it’s registered, appointed two provisional liquidators to negotiate with creditors.
The scandal-dogged firm, which was delisted in June, turned heads last month when it resumed touting for new retail partners in what was essentially a franchise plan.
Filing for bankruptcy in New York would “promote centralized administration of the company’s assets by permitting coordination between the Cayman court and the U.S. bankruptcy court,” as the company continues to negotiate with stakeholders, it said.
In April, an internal audit revealed the company had made up $300 million in sales between at least April 2019 and January of last year. It agreed to pay $180 million to settle fraud charges from the U.S. Securities and Exchange Commission in December.
Quick Takes are condensed versions of China-related stories for fast news you can use.
Related: Embattled Luckin Dusts Off Franchise Plan to Tout for New Retail Partners
Anniek Bao contributed to this report.
Contact reporter Timmy Shen (email@example.com) and editors Flynn Murphy (firstname.lastname@example.org) and Marcus Ryder (email@example.com)
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