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Reports indicate that Red Lobster is considering filing for bankruptcy to reduce financial struggles that the company has experienced.
Sources say that Red Lobster is considering a Chapter 11 bankruptcy filing to renegotiate leases and to deal with other long-term contracts as labor expenses have increased.
The seafood restaurant chain has hired law firm King & Spalding; however, no final decisions regarding the bankruptcy filing have been determined.
By setting this into motion, the restaurant chain would still be able to operate as it connects with creditors and investors to create a debt reduction strategy that will assist in a better financial foundation.
In 1968, Bill Darden and Charles Woodsby founded Red Lobster. Since then, the chain has had many owners and stakeholders.
In 1970, General Mills bought the company and assisted with it quickly growing throughout the U.S. and Canada. This was prior to becoming an independent public trading company named Darden Restaurants more than 20 years later.
After other changes, in 2021, Thai Union took over the company. However, at the beginning of this year, they stated that they were deciding to exit the investment in Red Lobster and accept a write-off. This is after noting that Red Lobster’s financial requirements no longer correlate with Thai Union’s “capital allocation priorities.”
In March, Red Lobster made Jonathan Tibus its new CEO. Tibus is thought to be an expert in developing and creating restructuring ideas at low performing restaurants, and retail and hospitality businesses.
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