Luckin Seeks Chairman’s Resignation Amid Accounting Scandal

Luckin Coffee Inc.’s board will require Chairman Charles Zhengyao Lu to resign, adding to the fallout from an accounting scandal that has battered the onetime market darling.

The proposal was requested by a majority of directors and was based on the findings of an internal investigation, the Chinese company said in afiling. The board will hold a special meeting on the matter on July 2.

The move, coming after Luckinfired its chief executive officer last month, reflects increasing turmoil at a company once considered one of China’s brightest growth stories. The Xiamen-based retailer faces scrutiny from regulators in the U.S and China after acknowledging fabricated transactions to inflate sales.

The company’s U.S. depositary receipts plunged 54% Friday after Luckin said it wouldno longer seek a hearing on a potential delisting from the Nasdaq Global Select Market. Luckin has fallen 96% this year.

Luckin, founded in 2017, raised $645 million in its U.S. IPO last year and counted BlackRock Inc. among its backers. It took direct aim at Starbucks Corp. in China, with a strategy to open more stores in two years than the Seattle-based heavyweight has in two decades.

Luresigned earlier this month as chairman and nonexecutive director of Car Inc., China’s biggest rental-car fleet operator.

Source: Read Full Article