After its accounting scandal, where the company revealed that more than a quarter of its business had been falsified and the resulting delisting from the NASDAQ exchange, Luckin Coffee (LKNCY  ) has filed for Chapter 15 bankruptcy in the United States.

The Chapter 15 declaration protects Luckin from litigation from its shareholders and any debt holders. Luckin, which is incorporated in the Cayman Islands, is undergoing restructuring as part of an ongoing court case. Once resolved, it should result in a settlement with the company's debtors and irate shareholders. However, the filing won't affect the company's business operations in China, "including paying suppliers, vendors, and employees," the company said.

Luckin spent much of last year under intense scrutiny from analysts, regulators, and the press as the tale of the company's financial fraud unfolded. The debacle began at the tail end of January last year when Muddy Waters Research first warned that the company had been falsifying financial figures. After an internal investigation, Luckin announced that its COO had been fabricating sales, amounting to roughly $310 million worth of fake sales. This prompted investigations both by Chinese and American regulators and would later result in approximately $189 million in both countries' fines.

Even once Luckin settles affairs with regulators and litigants, the company still faces the looming threat posed by the rapidly eroding patience of the U.S. Federal Government. Like all Chinese firms operating in the U.S., Luckin's U.S.-based operations face an existential threat in the form of legislation passed by Congress that could result in Chinese companies being ejected from US Markets.

The scandal all but annihilated Luckin's stock. During the first half of 2020, Luckin's stock plummeted from $50 in January to a mere $2 in May, due to a combination of the ongoing investigations, bad press, a trading freeze, and the company's eventual delisting by NASDAQ. Since its delisting, Luckin has remained purchasable as a pink-tier over-the-counter stock.

Since being relegated to OTC trading, Luckin recovered somewhat, reaching a high of $13.32 last month. The chapter 11 declaration, however, brought Luckin back down considerably. Shares slipped 45% during pre-market trading, falling from Thursday's close of $12.81 to $7.01 at market open last Friday.