Red Lobster filed for Chapter 11 bankruptcy on Sunday, announcing it would close numerous restaurants and sell equipment to raise cash.
The announcement comes a week after the company closed 48 stores, citing the economic downturn caused by the coronavirus pandemic. The chain has reportedly been considering bankruptcy for more than a month and is now relying on a financial recovery to restore the remaining funds for the nation’s largest seafood chain.
The remaining restaurants are expected to remain open during the bankruptcy process, which includes the sale of the company back to its lenders.
“This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges, emerge stronger, and refocus on growth.” CEO Jonathan Tibbs said in a statement. “The support we have received from our lenders and vendors will allow us to complete the sale process quickly and efficiently while remaining focused on our employees and guests.”
According to bankruptcy court filings, the company faces between $1 billion and $10 billion in debt and more than 100,000 debtors. Also, the total assets are between $1 billion and $10 billion.
Red Lobster has struggled for years, seeking debt restructuring earlier this year and suffering the exit of its largest investor, a Thai seafood industry.
Recent efforts to boost business, including last year’s all-you-can-eat shrimp deal, backfired and cost the company more than $10 million.
The company operates 700 locations worldwide.
The Orlando-based chain was founded by Bill Darden, who wanted to make seafood restaurants more accessible and affordable for families.
Darden sold Red Lobster to General Mills in 1970. General Mills later created Darden Restaurants, which owned Olive Garden and other chains, before spinning the company off in 1995.
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