Red Lobster Files for Chapter 11 Bankruptcy in Florida Amid Restructuring Efforts
**Red Lobster Files for Chapter 11 Bankruptcy Amid Operational Challenges**
In a significant move, Red Lobster has officially filed for Chapter 11 bankruptcy protection in Florida, as announced in a statement on Sunday night. The renowned seafood chain is entering a stalking-horse purchase agreement, aiming to sell its business to an entity formed by its existing term lenders. This strategic step is part of Red Lobster’s plan to drive operational improvements, reduce the number of locations, and pursue the sale of substantially all of its assets.
Despite the bankruptcy proceedings, Red Lobster assures that its restaurants will continue to operate as usual. The company has secured a $100 million debtor-in-possession (DIP) financing commitment from its current lenders to maintain operations during this period. Red Lobster CEO Jonathan Tibus expressed confidence in the restructuring process, stating it as the best path forward for addressing financial and operational challenges and emerging stronger.
The bankruptcy filing follows a period of financial strain exacerbated by the “Ultimate Endless Shrimp” promotion, which, despite its popularity, contributed to a significant loss for the company. Red Lobster had closed around 90 restaurants prior to the filing and had been considering bankruptcy as a means to restructure debt, affected by various factors including labor costs and lease obligations.
Thai Union Group, based in Thailand, remains the largest shareholder of Red Lobster, owning 49% of the company since 2020. The chain had previously been sold by Darden Restaurants to Golden Gate Capital in 2014 for approximately $2.1 billion.
As Red Lobster navigates through bankruptcy, the company aims to keep popular offerings like the “Ultimate Endless Shrimp” on the menu, albeit with more careful consideration of pricing and promotion strategies. Meanwhile, an online auction featuring kitchen equipment from closed Red Lobster locations has been labeled “The Largest Restaurant Equipment Auction Ever” by TAGeX Brands.
The future of Red Lobster now hinges on the successful execution of its restructuring plan, as it seeks to overcome the challenges that led to its current financial predicament.
