College e-learning firm ChinaCast Education Corp. said that it has filed for chapter 11 to pursue claims of embezzlement against former executives while shielding itself from a class action lawsuit by investors, Reuters reported yesterday. The filing with in bankruptcy court came a day after a district court awarded ChinaCast investors $65.8 million in damages in a class action accusing the firm of failing to disclose an embezzlement of company assets. ChinaCast was one of hundreds of Chinese companies that entered the U.S. stock markets during the last decade through a reverse merger, a short-cut for going public by taking over a publicly traded company. ChinaCast, which is currently winding down its business, disclosed in May 2012 that it had been the victim of a financial fraud by company insiders. In its bankruptcy filing, the company said its chapter 11 plan would establish a litigation trust to try to recover the embezzled funds. ChinaCast went public in the U.S. in 2006 and traded on the NASDAQ exchange from 2007 until it was delisted in 2012 for failing to file its annual report.
