Red Lobster Opts for the 'Best Path Forward'

Seafood chain files for Chapter 11 bankruptcy protection
By Jenn Gidman,  Newser Staff
Posted May 14, 2024 9:05 AM CDT
Updated May 20, 2024 5:34 AM CDT
Red Lobster Shutting a Bunch of Locations
This Sept. 13, 2016, file photo, shows a Red Lobster restaurant in North Miami, Florida.   (AP Photo/Wilfredo Lee, File)
UPDATE May 20, 2024 5:34 AM CDT

The whispers are now official: Red Lobster has filed for bankruptcy protection. The seafood restaurant chain announced Sunday that it filed for relief under Chapter 11, under a stalking-horse agreement in which Red Lobster will sell the business to an entity created and controlled by its existing term lenders, reports the Wall Street Journal. The company says proceeding this way will allow it to streamline operations and continue operating while working out a plan to repay its creditors, per Bloomberg. That outlet notes that, per a court filing, Red Lobster listed assets of $1 billion to $10 billion, and liabilities equaling the same amount, in its bankruptcy petition. "This restructuring is the best path forward for Red Lobster," says CEO Jonathan Tibus, per the Journal. "It allows us to address several financial and operational challenges and emerge stronger and refocused on our growth."

May 14, 2024 9:05 AM CDT

Get your cheddar biscuits while you can—Red Lobster is shutting its restaurants in droves. CNN reports that the chain is shuttering at least four dozen of its 650 or so locations around the nation, listing those sites as "temporarily closed" on its website, according to local news reports. An auction is also taking place through Thursday, via TAGeX Brands, of Red Lobster kitchen supplies, furniture, and more.

"TAGeX Brands is conducting the largest restaurant equipment auction event ever, auctioning off the contents of 50-plus former Red Lobster locations across the country that were closed as part of Red Lobster's footprint rationalization," TAGeX Brands said in a statement, per Business Insider. Bloomberg reported last month that the chain had been considering filing for Chapter 11 protections so it could restructure its debt. Thai Union had taken control of the company in 2020, but earlier this year, Thai Union announced it wanted out of its minority ownership position.

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Per Business Insider, the Red Lobster closures will be seen everywhere from New York and Florida to Colorado and California. Factors cited for its demise range from "corporate mismanagement" to the hit it took during the pandemic, as well as $11 million in losses it took in Q3 of last year for its all-you-can-eat shrimp promotion. There's also been a steady turnover in management over the last few years. (More Red Lobster stories.)

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