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Red Lobster Files Chapter 11 Bankruptcy

More restaurant closings in reorganization plan




This Red Lobster in Torrance, Calif., is on the list of restaurants the chain announced it was closing earlier this month. Photo: Chuck Bennett/iStock

As expected, Red Lobster Management LLC (Orlando), has filed for Chapter 11 bankruptcy. The company said it intends to use the proceedings “to drive operational improvements, simplify the business through a further reduction in locations and pursue a sale of substantially all of its assets as a going concern.”

As part of its filing, made in the U.S. Bankruptcy Court for the Middle District of Florida, Red Lobster also entered into a “stalking horse” agreement to sell its business to an entity formed and controlled by its existing term lenders.

The remaining Red Lobster’s restaurants will remain open and operating as usual during the Chapter 11 process. The company has been working with vendors to ensure that operations are unaffected and has received a $100 million debtor-in-possession (“DIP”) financing commitment from its existing lenders.

“This restructuring is the best path forward for Red Lobster,” said CEO Jonathan Tibus. “It allows us to address several financial and operational challenges and emerge stronger and refocused 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.”
As noted in the link at the start of this story, prior to the filing, the chain abruptly shuttered 90-plus restaurants, leaving it with about 550 locales.



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