Luckin Coffee plots relisting in US two years after $300m fraud

Once hailed as the biggest threat to Starbucks’ dominance in China, Luckin was delisted from the Nasdaq in June 2020 and agreed to pay $180 million to resolve accounting fraud charges brought by the Securities and Exchange Commission. The SEC claimed Luckin raised more than $864 million from investors during the period of the falsified accounts.

According to two people familiar with the company’s senior management discussions, Luckin is considering relisting on Nasdaq, possibly as soon as the end of this year. Luckin has met with investors and advisers in advance of the proposed relisting and to discuss alternative capital raising strategies. They stated that the coffee company’s new management and recent growth could make it an attractive turnaround prospect for investors.

Luckin filed for bankruptcy in the United States in 2021 in order to restructure its debts while maintaining the operation of its coffee shops. It may proceed with the relisting plan once the bankruptcy process is complete, one of the people said. The fraud allegations were first made public in early 2020 by short seller Muddy Waters, which accused the chain of operating under a “inherently flawed” business model and inflating sales.

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