Red Lobster, the seafood chain known for its Cheddar Bay biscuits and endless shrimp deals, has filed for bankruptcy protection after months of financial woes and store closures.
On May 19, Red Lobster Management LLC, which owns the restaurant chain, announced it has voluntarily filed for relief under Chapter 11 bankruptcy in the United States Bankruptcy Court for the Middle District of Florida. As part of the filings, Red Lobster says it plans to remain open and sell its businesses to existing lenders.
According to legal documents, Red Lobster reports at least $1 billion in debt. Though, the announcement notes the company has been working with vendors to ensure its operations aren’t affected. The struggling chain has received a $100 million financing commitment from existing lenders in order to satisfy creditors while continuing to operate its businesses.
Representatives for Red Lobster did not immediately respond to TODAY.com’s request for comment.
Still, the announcement states the company plans to “simplify the business through a reduction in locations” and plans on selling “substantially all of its assets,” which means more location closings may soon be on the horizon.
“This restructuring is the best path forward for Red Lobster,” Jonathan Tibus, CEO of Red Lobster, said in a press release. “It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth. The support we’ve received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests.”
Red Lobster has been open since 1968 and has over 700 locations around the world, according to its website. It’s currently America’s largest seafood chain but has faced more than a few financial setbacks in recent times.
Back in November 2023, Red Lobster faced an outsized demand for its low-cost “Ultimate Endless Shrimp” deal which ended up hurting the company’s profits. The chain then increased the price of the deal to from $20 to $25.
Then, in January, Red Lobster investor Thai Union announced it was seeking to exit its investment in the company, reporting a loss of $19 million and saying in a statement it was pursuing an exit of its minority investment due to the chain’s “ongoing financial requirements.”
CNBC reported in April that Red Lobster considered filing for bankruptcy in the hopes of escaping expensive and long-term leases. The report said the company was seeking a buyer to avoid filing altogether.
Then, earlier this month, liquidation firm TAGeX Brands auctioned off the contents of dozens of Red Lobster locations around the country. The firm was selling off the entire contents — including furniture, fixtures and equipment — of at least 48 stores across 21 states.
This article was originally published on TODAY.com