In a statement Friday explaining his Chapter 15 presentation, Luckin said the measure will help him restructure himself financially and strengthen his balance sheet. This type of presentation protects US assets of foreign companies in the process of restructuring in their home country.
The bankruptcy will not “materially affect” Luckin’s day-to-day operations and its nearly 3,600 cafes will remain open, according to a statement.
The presentation ends a tough year for the company. Last April, it was revealed that Luckin’s former chief operating officer Jian Liu and several of his direct reports “had committed certain misconduct, including the manufacture of certain transactions” as of 2019 by a amounting to about $ 310 million.
Lu and CEO Jenny Zhiya Qian were fired in May 2020. Months later, their shares were withdrawn from the Nasdaq Stock Exchange. In December, the Securities and Exchange Commission imposed a $ 180 million fine on the company for resolving the fraud charges.
Luckin went public in 2019 and rose due to what appeared to be strong sales growth. Investors left the stock market, betting that the chain would become a legitimate rival of Starbucks, which generates a large portion of its revenue from Chinese consumers.