It’s Official Red Lobster Officially Files For Bankruptcy

Bidenomics has taken down another well-known food chain.

Just one week after the popular seafood chain Red Lobster announced it would close over 99 locations, the chain has filed for bankruptcy.

Red Lobster Management LLC, the owner of Red Lobster seafood restaurant, announced that the company has voluntarily filed for relief under Chapter 11.

Red Lobster’s bankruptcy filing is due to the chain’s significant debt, unfavorable lease terms, and a backfired all-you-can-eat shrimp promotion.

Red Lobster has filed for bankruptcy pic.twitter.com/5oB6EAkiBs

— Dexerto (@Dexerto) May 20, 2024

Per PRN Newswire:

Red Lobster Management LLC, along with its direct and indirect operating subsidiaries (“Red Lobster” or “the Company”), owner and operator of the Red Lobster® restaurant chain, today announced that the Company has voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida. The Company intends to use the proceedings to drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets as a going concern. As part of these filings, Red Lobster has entered into a stalking horse purchase agreement pursuant to which Red Lobster will sell its business to an entity formed and controlled by its existing term lenders.

Red Lobster’s restaurants will remain open and operating as usual during the Chapter 11 process, continuing to be the world’s largest and most-loved seafood restaurant company. The Company has been working with vendors to ensure that operations are unaffected and has received a $100 million debtor-in-possession (“DIP”) financing commitment from its existing lenders.

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Jonathan Tibus, the Company’s CEO, said “This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused 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.”

Red Lobster, the largest seafood restaurant chain in the world, has filed for bankruptcy. The company said it had more than $1 billion in debt. pic.twitter.com/PivqoCXSLd

— Breaking911 (@Breaking911) May 20, 2024

Per CNBC:

Red Lobster has filed for Chapter 11 bankruptcy protection, continuing the process to shrink its footprint and find a buyer, the company said in a statement.

The seafood chain also said it has a so-called stalking horse bid from its existing lenders to buy the company, unless a higher bid comes along.

CNBC reported last month Red Lobster was seeking a buyer, weighed down by significant debt and long-term leases. The company recently appointed a restructuring expert — Jonathan Tibus, a managing partner with advisory firm Alvarez & Marsal — as its CEO.

In a court filing, Tibus blamed a “difficult macroeconomic environment, a bloated and underperforming restaurant footprint, failed or ill-advised strategic initiatives, and increased competition within the restaurant industry” for the chain’s need to file for Chapter 11 protection.

Red Lobster has filed for Chapter 11 protection.

It’s one of the largest restaurant bankruptcies in recent years. https://t.co/EloGOy38Nd

— Axios (@axios) May 20, 2024