In a statement on Friday explaining her request to Chapter 15, Luckin said the move would help her restructure financially and strengthen her balance sheet. This type of deposit protects American assets of foreign companies undergoing restructuring in their home country.
The bankruptcy will not “materially affect” Luckin’s day-to-day operations and his nearly 3,600 cafes will remain open, according to a statement.
The process ended a difficult year for the company. Last April, it was revealed that Luckin’s former chief operating officer, Jian Liu, and several of his direct reports “got involved in certain misconduct, including making certain transactions” starting in 2019 for about $ 310 million.
Lu and CEO Jenny Zhiya Qian were fired in May 2020. Months later, their shares were withdrawn from the Nasdaq exchange. In December, the Securities and Exchange Commission imposed a $ 180 million fine on the company to settle fraud charges.
Luckin went public in 2019 and skyrocketed due to what appeared to be strong sales growth. Investors swallowed the shares, betting that the chain would become a legitimate rival to Starbucks, which generates a large part of its revenue with Chinese consumers.