CHINESE COFFEE CHAIN LUCKIN COFFEE FILES FOR BANKRUPTCY IN THE US

The Chinese coffee chain Luckin Coffee, which has been slowly recovering its business after the scandalous exclusion from the American stock exchange Nasdaq, filed for bankruptcy protection in the United States. The company's management is currently trying to get permission for financial restructuring.

The company, once cited as Starbucks' main Chinese rival, shocked Wall Street in 2019 by stating that hundreds of millions of dollars of sales had been fabricated. The US Securities and Exchange Commission imposed a $ 180 million fine on the coffee chain after finding it had altered bank records and set up a fake database as part of an effort to fabricate its accounts.

The company's shares were subsequently delisted from the Nasdaq exchange.

In December 2020, Luckin Coffee agreed to pay the Securities and Exchange Commission $ 180 million for defrauding investors by "materially misrepresenting the company's income, expenses and net operating losses."

By filing for bankruptcy, Luckin Coffee's management hopes to protect the company from lawsuits by the US creditors, including bondholders and shareholders owed $ 460 million.

According to a statement made on Friday, the chain's coffee shops in China will remain open - the application will not affect their operations.

“The company will continue to operate as usual and meet its obligations, including payments to suppliers, vendors and employees,” the statement said.

In the US court documents, company’s officials asked a federal judge in Manhattan to allow the financial restructuring through a court case opened in the Cayman Islands, where the company is incorporated. According to the documents, the proceeding is already underway and is focused on negotiations with shareholders and bondholders.