According to informed sources, seafood chain restaurant “Red Lobster” is considering filing for bankruptcy under Chapter 11 of the US Bankruptcy Code to restructure its debt.
Bloomberg reported on Tuesday (April 16) citing an anonymous source that Red Lobster has been seeking advice from the law firm King & Spalding.
The source said that the restaurant chain is considering filing for bankruptcy under Chapter 11 of the US Bankruptcy Code to abandon some long-term contracts and renegotiate a series of leases.
High rent and expensive labor costs have been dragging down Red Lobster’s cash flow. They mentioned that discussions on restructuring are ongoing and no final decision has been made yet. Filing for bankruptcy would allow the company to continue operating while implementing a debt reduction plan.
Being the largest seafood chain restaurant enterprise in North America, Red Lobster owns over 700 locations. Red Lobster can be traced back to a restaurant in Lakeland, Florida in 1968.
In recent years, this chain restaurant has undergone multiple changes in ownership and management. Thai Union Group Plc acquired control of Red Lobster in 2021, but reduced its stake in 2024. Thai Union stated that Red Lobster’s “continued financial requirements no longer align with the capital allocation priorities of Thai Union Group.”
Informed sources revealed that Fortress Investment Group, LLC, an American investment management company, is a major lender to Red Lobster and is one of the institutions participating in the current debt negotiations.
Both Red Lobster and King & Spalding law firm did not respond promptly to Bloomberg’s requests for comment.
Responsibility Editor: Lin Yan#