Red Lobster hired auction company ‘very recently’ before shutting 50 restaurants, may file for bankruptcy next week: sources

Red Lobster, which hurriedly hired a liquidation firm before unexpectedly closing dozens of stores this week, is expected to file for bankruptcy as early as Monday, the Post reported.

Auction firm TAGeX Brands was recently hired to sell furniture and equipment from 50 closed Red Lobster restaurants, company founder Neil Sherman told the Post.

“I’ve never seen so many stores closed and auctioned off at the same time. We’ve been doing this for 37 years,” Sherman said, adding that final bidding is scheduled for Thursday. Ta.

Red Lobster operates 650 stores across the United States and began closing dozens of stores this week. AFP (via Getty Images)

The nation’s largest seafood chain, known for its all-you-can-eat shrimp, recently filed for Chapter 11 after failing to find a buyer or attract new investors, according to a knowledgeable bankruptcy attorney. The company reportedly notified the retailer that the product was present. of the situation.

“They have been planning to file a lawsuit for some time,” an attorney who said he had spoken to one major vendor told the Post.

The Orlando, Florida-based company, which had 650 stores nationwide before its sudden closure, is considering filing for bankruptcy, as the Post reported last month.

Late Tuesday, The Wall Street Journal report Red Lobster plans to file for bankruptcy before Memorial Day, and says it plans to use the process to get rid of onerous contracts with landlords.

The move could reduce debt by hundreds of millions of dollars, the report said.

Some Red Lobster employees only came to work after learning the restaurant had closed. Reuters

The expected bankruptcy filing comes after the struggling chain locked out hundreds of employees who reported to work and handed out notices to close restaurants.

restaurant business magazine report 99 stores were closed.

Red Lobster has been struggling for years, but the final straw appears to have been last summer’s loss-making $20 all-you-can-eat shrimp promotion, which cost the company $11 million.

The company’s largest shareholder – Thai Union, a listed company holding 49% of the shares – announced in January He plans to withdraw from the investment immediately after the shrimp debacle.

Red Lobster employee David Brown has worked at the Florida restaurant for 37 years. Bob Self/Florida Times Union/USA TODAY NETWORK
The iconic restaurant chain lost millions of dollars last year on an overly generous shrimp promotion. AFP (via Getty Images)

The Bangkok-based seafood producer increased its shrimp trading price by $5 by the fall, but still lost money on the promotion.

“We knew the prices were low, but the aim was to increase foot traffic to the restaurant,” Ludovic Garnier, chief financial officer of the Thai Labor Union, said at an earnings conference. “We need to be more cautious about the entry points and prices we offer in this promotion.”

Thai Union, which acquired the brand in 2016 and increased its stake in 2020, recorded a $530 million writedown on its investment, the company said.