Red Lobster Company Is Considering Filing For Bankruptcy

(CTN News) – Reports indicate that Red Lobster is considering filing for bankruptcy in order to relieve financial pressures.

An article by Bloomberg citing people familiar with the discussions indicates that Red Lobster may file Chapter 11 bankruptcy to renegotiate burdensome leases and address other long-term agreements as well as rising employment costs.

As reported by the outlet, the seafood restaurant chain is currently advised by the law firm King & Spalding. Talks about restructuring are ongoing. No final decisions have been made regarding bankruptcy filings.

If the company files for Chapter 11 bankruptcy, it will be able to continue functioning while it works with creditors and investors to come up with a plan to reduce its debts in order to move forward on a better financial footing.

Red Lobster was not immediately available for comment.

Since its founding by Bill Darden and Charley Woodsby in 1968, the seafood chain has had several owners and major investors.

Following General Mills’ acquisition of the company in 1970, Darden Restaurants was spun off over two decades later as an independent publicly traded company called Darden Restaurants.

As part of Golden Gate Capital’s acquisition of Darden Restaurants, Red Lobster was acquired from Darden in 2014. Thailand Union acquired Golden Gate’s stake in the company as part of its acquisition of a fourth interest in the company as part of its purchase of a fourth interest in the company in 2021.

A regulatory filing by Thai Union earlier this year indicated that the company intends to exit its investment in Red Lobster and write off the investment because of ongoing financial requirements for the restaurant chain that no longer align with Thai Union’s capital allocation priorities.

Jonathan Tibus has been tapped as the president and CEO of Red Lobster since last month. There is no doubt that Tibus is an expert when it comes to developing and implementing restructuring plans.

He has led numerous restructuring efforts at underperforming restaurants, retail stores, and hospitality companies.

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