Luckin Coffee emerges from bankruptcy proceedings

Luckin Coffee said it has emerged from bankruptcy proceedings two years after the tech-enabled brand confirmed it fabricated millions of dollars in revenue.

The Chinese rival to Starbucks sought protection from lawsuits and filed under Chapter 15 of the bankruptcy code in New York and said it has restructured its financial indebtedness.

Photo credit: Luckin

The development comes after the US Securities and Exchange Commission hit the coffee chain with a US$180 million penalty after finding that Luckin cooked financial statements to the tune of nearly US$300 million in revenue and US$190 million in costs and expenses.

However, Luckin is now reportedly exploring plans to relist its shares in the US by the end of this year. A fresh management and recent growth at Luckin could also help the coffee company raise funds ahead of a potential listing.

“As we have emerged from this process successfully with the support of our creditors, we are confident that Luckin Coffee is well positioned for long-term growth and creation of stakeholder value,” said Luckin CEO Jinyi Guo.

The revelations of fraud were first published in early 2020 by shortseller Muddy Waters, which accused the chain of having an “inherently flawed” business model and inflating sales.

See also: Lessons from the Luckin fiasco

Because of its financial misconduct, the Chinese company’s shares plunged by as much as 89% in 2020, before being delisted from the Nasdaq. It also led to the firing of Luckin’s CEO Jenny Qian and chief operating officer Jian Liu.