*Red Lobster is reportedly considering filing for Chapter 11 bankruptcy to facilitate the restructuring of its finances and operations.
According to Bloomberg, Red Lobster is receiving counsel from the law firm King & Spalding, which is advising the popular seafood eatery to file for bankruptcy. This move aims to renegotiate challenging leases, address other long-term contracts, and manage increasing labor costs.
As Fox Business reports, General Mills acquired Red Lobster in 1970, aiding its rapid expansion across the U.S. and Canada. Over two decades later, it became an independent entity, Darden Restaurants. Darden sold Red Lobster to Golden Gate Capital in 2014. In 2020, Thai Union, previously holding a one-fourth stake, bought out Golden Gate’s stake.
Thai Union intends to divest from its investment and incur a write-off. This decision came after the company stated in a regulatory filing that the restaurant chain’s “ongoing financial requirements no longer align with Thai Union’s capital allocation priorities.”
Last month, Red Lobster appointed Jonathan Tibus as its new CEO. Tibus is known for his expertise in revitalizing struggling restaurants and retail and hospitality businesses.
According to Fox Business, Red Lobster has had various owners and investors since Bill Darden and Charley Woodsby founded it in 1968.
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