Chinese beverage chain Luckin Coffee filed for bankruptcy protection in the US on Friday, less than a year after it admitted to falsely reporting more than $300 million in sales in 2019 financial reports.

Why it matters: The filing is another step in a reckoning for the app-powered beverage chain, which had aggressively challenged US-based Starbucks in China with breakneck store expansion and steep customer discounts.

  • Now trading on the US OTC market, Luckin shares fell 46.5% in Friday afternoon trading to $6.86.

Details: Luckin and its liquidators filed a Chapter 15 petition in New York early Friday morning, seeking to stave off creditors in the US including shareholders and subscribers of the $460 million, five-year bond it raised less than four months prior to its fraud admission.

  • The filing will not impede the company’s business operations in China, “including paying suppliers, vendors, and employees,” it said in a statement.
  • Luckin seeks to centralize the restructuring of its finances through pending liquidation court proceedings in the Cayman Islands, where the company is registered.
  • “The Chapter 15 filing is a routine filing in the context of Cayman restructuring involving international jurisdictions,” the joint liquidators said in a statement sent to TechNode on Friday.
  • Luckin continues to operate 3,898 stores in China as of November, of which 60% are profitable at store level, according to a report provided to a Cayman Islands court.

Context: Ten months ago, Luckin announced that the company COO and a number of employees had falsified more than RMB 2.2 billion ($311 million) in sales and inflated costs from April 2019 to January 2020. Its leadership appears in to be in tumult even as it moves forward with new business developments, including inviting franchise partners in lower-tier city markets.

  • Chinese regulators in September fined the company and affiliates $9 million for unfair competition practices related to its sales fraud.
  • US regulators delisted the company from Nasdaq on July 1, and fined the company $180 million for accounting fraud in December.
  • Luckin share prices neared $40 apiece in January 2020, before short-seller Muddy Waters shared an anonymous report accusing the company of disclosing falsified operation figures in a tweet.