In shocking news, Red Lobster is considering filing for bankruptcy.
According to Bloomberg, the company is filing for Chapter 11 bankruptcy to address labor costs and leases.
The seafood restaurant chain is consulting with law firm King & Spalding on the topic, though it hasn’t made a final decision.
What Does Filing For Bankruptcy Mean For Red Lobster?
If Red Lobster files for bankruptcy, the restaurant chain might continue operating while it works with investors and creditors to implement a debt reduction plan that will lay the foundation for a more stable future.
The company has had several investors and owners since its 1968 founding by Charley Woodsby and Bill Darden.
General Mills bought the restaurant chain in 1970 and injected capital that helped it to expand across the U.S. and Canada quickly.
Two decades later, General Mills sold to Darden Restaurants, an independent publicly traded company.
Darden Restaurants held on to Red Lobster until 2014 when it sold the seafood restaurant chain to Golden Gate Capital.
In 2021, Golden Gate Capital sold to Thai Union.
Early this year, Thai Union announced its plan to abandon Red Lobster because the restaurant chain’s “ongoing financial requirements no longer align with Thai Union’s capital allocation priorities.”
To help save the restaurant, Jonathan Tibus joined as CEO last month.
He’s a pro in developing successful restructuring plans at struggling restaurants and could be just what the restaurant chain needs.