Shares of Chinese coffee company Luckin Coffee (LKNCY Quick QuoteLKNCY - Free Report) are plunging on Friday after announcing that it filed for Chapter 15 bankruptcy in the U.S. LKNCY trades on OTC markets, and fell nearly 50% in afternoon trading.

This move is designed to protect Luckin from legal action from U.S. creditors including shareholders and bondholders owed $460 million. Luckin said its retail stores will still remain open for business; its coffee continues to be popular in China.

The company was once seen as a major Starbucks (SBUX Quick QuoteSBUX - Free Report) competitor in China, but that dream quickly faded--Luckin announced last year that a significant period of revenue, expenses, and net operating loss, around $300 million, may have been faked. Chairman Charles Lu was quickly removed from his position, and shares have since been delisted from the Nasdaq.

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