Luckin Coffee, which was once hailed as China’s rival to Starbucks, has filed for bankruptcy in the United States.
The move is not expected to have a significant impact on the company’s operations in China but Luckin Coffee stated that its US bankruptcy would promote the company’s transformation. All of its China stores will remain open and will continue to offer the same services to customers.
The company first came into trouble last April when it publicly acknowledged that it had engaged in fraudulent activity between Q2 and Q4 2019 which amounted to sales of approximately 2.2 billion RMB.
Luckin Coffee was established in October 2017 and became the fastest Chinese Internet company to IPO when it listed on the Nasdaq eighteen months later. However, it was suspended following the revelations of its fraudulent conduct.
In December, the US Securities and Exchange Commission announced that Luckin Coffee had reached a settlement to pay $180 million in compensation for its fraudulent activities.