China’s Luckin Coffee files for bankruptcy in US

Luckin Coffee has filed for bankruptcy protection in the US, less than a year after the China-based coffee chain said hundreds of millions of dollars of sales had been fabricated.

The company, once touted as China’s rival to Starbucks, sought chapter 15 relief in New York to allow a financial restructuring.

Luckin, which listed in New York in 2019, shocked Wall Street when the accounting scandal came to light and the stock was subsequently delisted from the Nasdaq exchange.

The Securities and Exchange Commission in December hit Luckin with a $180m penalty after finding it had altered bank records and set up a fake database as part of an effort to fabricate its accounts.

Luckin said the company’s outlets remained open for business and the Chapter 15 petition was not expected to affect its day-to-day operations.

The move is “a piece of good news”, Luckin said in a statement on Friday on its social media account. Filing for bankruptcy could “put a break” on lawsuits against the company in the US and create conditions for the coffee chain to complete restructuring in the Cayman Islands, where it is registered, it said.