China’s Luckin Espresso seeks individual bankruptcy defense in U.S. after accounting fraud derails its quick rise
A cup of Luckin Coffee is poured during the company’s IPO at the Nasdaq Marketsite in New York on May well 17, 2019.
Brendan McDermid/Reuters
China’s Luckin Espresso Inc, whose explosive expansion was derailed final yr by accounting fraud, stated on Friday it is trying to find protection below Chapter 15 of the U.S. Personal bankruptcy Code.
The coffee chain mentioned the Chapter 15 petition, which would aid the restructuring of its debts, is not expected to materially influence its working day-to-working day operations, and that its retailers remain open up.
Chapter 15 individual bankruptcy makes it possible for a international debtor to shield belongings in the United States.
Xiamen-centered Luckin experienced positioned by itself as an bold home-developed challenger to U.S. coffee giant Starbucks Corp , but mentioned previous April that as significantly as 2.2 billion yuan ($340 million) in 2019 profits experienced been fabricated.
Luckin delisted from Nasdaq at the stop of June last yr soon after admitting to accounting fraud.
In December, it agreed to shell out the U.S. Securities and Commission a $180 million penalty to settle accounting fraud rates for “intentionally and materially” overstating its 2019 revenue and understating a web decline.
The organization said that it proceeds to fulfill its ongoing business obligations and is shelling out suppliers and team.
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