, China

Luckin Coffee files for bankruptcy in the U.S.

It asked a federal judge to allow it to restructure its finances through a court case filed in the Cayman Islands, where the company is incorporated.

Luckin Coffee filed for Chapter 15 bankruptcy in New York, less than a year after the company said that more than a quarter’s worth of business may have been fabricated.

In a statement, the embattled coffee chain - once touted as a potential rival to Starbucks - said the move will help it financially restructure itself and strengthen its balance sheet.

Bankruptcy will not "materially impact" Luckin's day-to-day operations and its roughly 3,600 cafes will remain open, according to a release.

Last April, it was revealed that Luckin's former chief operating officer Jian Liu and several of his direct reports "had engaged in certain misconduct, including fabricating certain transactions" beginning in 2019 amounting to about $310 million. Liu and CEO Jenny Zhiya Qian were both fired in May 2020. Months later, its stock was delisted on the Nasdaq exchange.

In December, the U.S. Securities and Exchange Commission slapped the company with a US$180 million penalty to settle fraud charges.

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