Orlando, Fla. — Red Lobster has voluntarily filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Middle District of Florida. The Orlando-based seafood restaurant chain plans to sell its business to an entity formed and controlled by its existing lenders.
Red Lobster, which was founded in 1968 and operates some 600 restaurants across North America, has received a $100 million debtor-in-possession financing commitment from its existing lenders to facilitate this plan. The company stated that it would use the financing and bankruptcy proceedings to drive operational improvements, simplify the business through a reduction in locations and pursue a sale of substantially all its assets.
Earlier this month, Red Lobster announced that it would be closing between 50 and 100 restaurants nationwide, a statement that fueled speculation on an imminent bankruptcy filing. Restaurants that were not included in this announcement from earlier in May will remain open throughout the bankruptcy proceedings, and the company says that it is continuing to work with its existing vendors to minimize operational disruption.
CNN reports that, at the time of the bankruptcy filing, Red Lobster listed more than $1 billion in debt and less than $30 million in cash on hand. The Atlanta-based news outlet also reported that Red Lobster stated in its filing that the chain generates approximately $2 billion in annual revenue, and that it is the purchaser of one out of every five lobster tails sold in North America.
“This restructuring is the best path forward for Red Lobster,” says CEO Jonathan Tibus. “It allows us to address several financial and operational challenges and emerge stronger and refocused on our growth. The support we’ve received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests.”
According to the company’s Wikipedia page, seafood distributor Thai Union owned a 49 percent stake in Red Lobster at the time of the filing, which it purchased in 2020 from San Francisco-based private equity firm Golden Gate Capital. In January 2024, Thai Union announced that it was looking to sell its interest in Red Lobster and would take a $530 million loss on its investment.
King & Spalding LLP, Berger Singerman LLP and Blake, Cassel & Graydon LLC are serving as legal advisors to Red Lobster. Alvarez & Marsal is serving as financial advisor and providing corporate leadership throughout the restructuring process.
— Taylor Williams