Red Lobster files for bankruptcy and confirms it will sell its assets – days after closing dozens of restaurants in the US

RED Lobster has officially filed for bankruptcy days after the popular seafood franchise announced the closure of dozens of restaurants across the country.

In its bankruptcy filing Sunday night, the restaurant announced it would sell its assets to help restructure the company.

two

two

Red Lobster confirmed to Wall Street Journal which has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Middle District of Florida.

The company told the outlet that it intends to use the relief to simplify its business structure by closing locations, as well as increase its operational efficiency.

“This restructuring is the best path forward for Red Lobster,” said Chief Executive Jonathan Tibus.

“This allows us to face various financial and operational challenges and emerge stronger and more focused on our growth.”

Red Lobster told the outlet it is working with several suppliers to maintain continued open-air operations.

It also revealed that the company has received a commitment of $100 million in debtor-in-possession financing.

Orlando, Florida-based Red Lobster is expected to sell the business to an entity that will be established and controlled by current term lenders, according to the Wall Street Journal.

News of the bankruptcy filing first came last week when the restaurant announced the closure of about 87 locations across the country, including Alabama, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Maryland , Michigan, Mississippi, New York, New York. Jersey, North Dakota, Oklahoma, South Carolina, Texas, Virginia, Washington and Wisconsin.

Customers at some locations were informed of the closures through a note posted on the restaurant door that said, “This location is closed.”

“We look forward to serving you at another Red Lobster location in the future.”

The contents of many of these locations are being sold at auctions, allowing fans to purchase kitchen equipment, furniture, and more from the restaurant.

TAGeX Brands manages liquidation auctions in 21 states.

Red Lobster has approximately 650 locations across the United States.

Reports indicated the massive seafood chain was struggling with debt after making just $2.2 billion in sales in 2023 – down 8% from 2022.

The company’s minority investor, Thai Union Group, I was looking for leave your investment from January.

At the time, Thai Union Group said it was recording a non-cash impairment charge of US$530 million in the fourth quarter of last year.

US Sun previously reported that the investor attributed the drop in sales to Red Lobster’s all-you-can-eat shrimp deal, which allowed customers to consume as much shrimp as they wanted for just $20.

The promotion was supposed to be limited until June 2023, but ended up being added to the menu.

Although a fan favorite, reports indicate that the stellar deal is partially responsible for Red Lobster’s $11 million loss in the third quarter of fiscal 2023.

Red Lobster did not immediately respond to The US Sun’s request for comment.