Red Lobster files for bankruptcy after closing several locations last week

Popular seafood restaurant chain Red Lobster filed for chapter 11 bankruptcy late Sunday, less than a week after closing several locations across the country.

The company filed for bankruptcy protection in the U.S. Bankruptcy Court for the Middle District of Florida over the weekend, and the business says it will use the process to improve operations, reduce locations, and pursue a sale of all assets. The restaurant chain will remain “open and operating as usual” as it goes through bankruptcy proceedings, according to the company.

“This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused 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,” Red Lobster CEO Jonathan Tibus said in a statement on Sunday.

The company also said in its filings that it had entered a “stalking horse purchase agreement,” which would move forward the sale of the company to a business owned and operated by its lenders. Red Lobster says it will continue to operate thanks to a $100 million debtor-in-possession commitment from its lenders. Court filings revealed that the company has more than $1 billion in debt, compared to $30 million cash on hand.

The restaurant chain opened its first location in Lakeland, Florida, in 1968, going under ownership of General Mills soon after and later being spun off with the rest of General Mills restaurant division as part of Darden Restaurants, Inc. in 1995. Red Lobster would become independent from Darden, which also owns Olive Garden and Longhorn Steakhouse, in 2014, and it has struggled financially in recent years.

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Red Lobster has 551 locations domestically, along with 27 locations in Canada and 27 franchised restaurants in Mexico, Ecuador, Japan, and Thailand.

The company suddenly closed more than 50 locations last week, fanning flames to reports of a potential bankruptcy filing by the company.

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