According to sources familiar with the matter cited by Bloomberg, Red Lobster is considering filing for Chapter 11 bankruptcy to renegotiate leases, address other long-term contracts, and manage rising labor costs.
The report indicates that the seafood chain is receiving counsel from the law firm King & Spalding on this matter. While discussions regarding restructuring are ongoing, no final decisions have been made regarding a bankruptcy filing.
Filing for Chapter 11 bankruptcy would allow Red Lobster to continue operating while working with creditors and investors to develop a plan to reduce debt, putting the company on a more stable financial path moving forward.
Red Lobster has not yet responded to requests for comment.
Since its founding in 1968 by Bill Darden and Charley Woodsby, Red Lobster has had various owners and major investors. General Mills acquired the company in 1970 and facilitated its rapid expansion across the U.S. and Canada. It later spun off as an independent publicly traded company named Darden Restaurants.
In 2014, Darden Restaurants sold Red Lobster to Golden Gate Capital. In 2021, Thai Union, which previously held a one-fourth stake in the company, acquired Golden Gate's stake in Red Lobster.
Earlier this year, Thai Union announced its intention to divest its investment in Red Lobster and take a write-off. The decision came after Thai Union stated in a regulatory filing that Red Lobster's financial requirements no longer aligned with the company's capital allocation priorities.
