Red Lobster Management LLC has officially filed for Chapter 11 protection in the United States Bankruptcy Court, as announced late Sunday evening. This move was widely anticipated, with CNBC reporting back in April that the seafood restaurant operator was actively seeking a buyer to avoid bankruptcy.
As part of their restructuring plan outlined in the filing, Red Lobster will be closing additional stores and selling off most of its assets. The company has already entered into an agreement with its existing term lenders to sell its business through a stalking horse purchase agreement.
In addition, Red Lobster has secured a $100-million debtor-in-possession commitment from its lenders and intends to keep all locations open during this process. According to Jonathan Tibus, recently appointed CEO and restructuring expert: “This is the best course of action for Red Lobster at this time. It allows us to address financial challenges and emerge stronger while focusing on growth.” He also expressed gratitude for support from lenders and vendors which will help facilitate a quick sale process while prioritizing employees’ well-being.
The chain was previously owned by Darden Restaurants before being sold off in 2014 to private equity firm Golden Gate Capital who later divested their ownership stake to an investor group.
