Luckin Coffee, previously mired in a financial fraud scandal, filed for Chapter 15 bankruptcy protection under the US Bankruptcy Code in New York, according to a filing.
The company is negotiating with its stakeholders regarding the restructuring of its financial obligations, to strengthen its balance sheet and enable it to emerge from the Cayman Proceeding as a going concern, for the benefit of all stakeholders, it said.
All Luckin Coffee stores in China remain open and serving customers and are not expected to have a significant impact on day-to-day operations, the company said on Weibo, adding that it will continue to meet its business obligations to pay suppliers, real estate agents, and employees.
Luckin Coffee said the Chapter 11 filing is an important step in its restructuring plan. "This is actually good news and takes Luckin Coffee's road to rebirth one step further."
In April 2020, Luckin Coffee issued an announcement acknowledging the existence of counterfeit transactions during the second quarter to the fourth quarter of 2019, involving sales of approximately 2.2 billion yuan.
On May 19, Luckin Coffee announced that it had received written notice from the Listing Qualifications Staff of The Nasdaq Stock Market that the staff had decided to delist Luckin Coffee stock from the Nasdaq market.
On May 22, Luckin Coffee requested an oral hearing before the Nasdaq Hearings Panel (Nasdaq Hearings Panel) pursuant to Market Place Rule 4820.
On May 23, Nasdaq notified Luckin Coffee of a scheduled hearing date of June 25, 2020.
On June 24, Luckin Coffee notified the Listing Eligibility Staff of its decision to withdraw the foregoing request for a hearing and not seek to rescind or set aside the Listing Eligibility Staff's decision to delist its shares from the Nasdaq Global Select Market.
Most recently, Luckin Coffee announced on January 18 that it is reopening its retail partner recruitment program with immediate effect, releasing franchise applications.
Luckin Coffee does not charge a franchise fee for partners, but franchisees will be required to pay an upfront investment fee provided by Luckin Coffee of between RMB 350,000 - RMB 370,000. This includes renovation costs of RMB 110,000 - RMB 130,000, production equipment of around RMB 190,000 and a deposit of RMB 50,000.
Luckin Coffee has set up a new technology company in Hainan with a registered capital of RMB 10 million ($1.5 million).
The company's legal representative is Luckin Coffee chairman and CEO Guo Jinyi, and the business scope includes food business, food Internet sales, catering services, computer software and hardware and auxiliary equipment wholesale, copyright agent, technical services, technology development, technology consulting, technology exchange, data provider Tianyancha's information shows.