Red Lobster, a well-known seafood restaurant chain in the US, recently filed for bankruptcy protection in the U.S. Bankruptcy Court for the Middle District of Florida. Despite this move, the company clarified that it is not going out of business and is instead using the legal process to strengthen its operations and cost structure.
In its recent filings, Red Lobster mentioned entering into a “stalking horse purchase agreement” with a business owned and operated by its lenders for the sale of the company. The seafood chain is facing more than $1 billion in debt compared to $30 million in cash on hand, prompting the need for restructuring. Prior to filing for bankruptcy, Red Lobster closed over 50 of its restaurants, some of which were located in major U.S. cities like Denver, Colorado, and Myrtle Beach, South Carolina. These locations were auctioned off by TAGeX Brands.
Red Lobster has emphasized that filing for bankruptcy can help the chain become a stronger company in the future and has pointed out examples of other well-known brands such as Delta Air Lines and Hertz that have filed for bankruptcy in the past and are now in better financial positions. The seafood chain originally opened its first location in Lakeland, Florida, in 1968 and has undergone various changes in ownership over the years.