China's Luckin Coffee files for bankruptcy in US

Luckin Coffee said its stores will remain open and its suppliers and employees paid as it goes through US bankruptcy proceedings
·1 min read

Chinese cafe chain Luckin Coffee on Friday announced it had filed for bankruptcy protection in the United States, months after it had been booted from Wall Street indices over a fraud scandal.

The decision won't affect the day-to-day operations of its stores, which will remain open, while Luckin will continue paying employees and suppliers, the company said in a statement.

"The company is negotiating with its stakeholders regarding the restructuring of the company's financial obligations," Luckin said.

Created in 2017 and billing itself as China's answer to iconic US coffee chain Starbucks, Luckin has grown at a rapid pace thanks to foreign investors.

But revelations last year that a manager inflated sales figures in 2019 caused a scandal, sending its shares plunging on the Nasdaq, where it traded from May 2019 before it was delisted from the index last July.

Luckin agreed to pay the US Securities and Exchange Commission $180 million last December to resolve fraud charges.