The bankruptcy plan hands control of Red Lobster to lenders which have agreed to $100 million in financing.
FILE - A Red Lobster restaurant is shown Sept.13, 2016, in North Miami, Fla. It was announced the week of May 13, 2024, that dozens of Red Lobster locations across the U.S. are now on the chopping block. The Orlando, Florida-based company filed for Chapter 11 protection on Sunday, listing assets and liabilities of $1 billion to $10 billion each in its bankruptcy petition. The filing allows the company to keep operating while it works out a plan to repay creditors.
Inflationary pressures have kept customers from dining out and higher labor costs strained the company’s finances. A “material portion” of Red Lobster’s leases were priced above market rates. In May 2023, the company changed its $20 “Ultimate Endless Shrimp” from a limited-time offer to a permanent promotion, costing it $11 million as diners devoured expensive plates of shrimp.
, serves 64 million customers per year and purchases 20% of all North American lobster tails, as well as 16% of all rock lobsters worldwide. Thai Union and Red Lobster had been in talks with lenders for an out-of-court deal that would hand the creditors 80% of the company, but discussions fell through. Lenders made additional loans worth $20 million to Red Lobster in February, but they weren’t willing to put in more money without support from the owner, according to court papers.
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