Red Lobster — which lost millions on its all-you-can-eat shrimp promotion last summer — filed for bankruptcy after the nation’s largest seafood chain unexpectedly shuttered nearly 100 locations last week.
The Orlando, Fla.-based chain filed for Chapter 11 protection after securing $100 million in financing commitments from its existing lenders, the company said.
Red Lobster listed its assets and liabilities to be between $1 billion and $10 billion, according to Sunday’s court filing.
The company said its remaining restaurants — including the only one in Manhattan in Times Square — will be open and operate as usual during the bankruptcy proceedings.
However, it plans to reduce its locations as well as pursue a sale of substantially all its assets.
The bankruptcy will allow Red Lobster to stave off evictions from landlords and other bills from vendors it hasn’t paid in recent months.
The restaurant chain also said it has entered into a “stalking horse” purchase agreement to sell its business to an entity formed and controlled by its existing term lenders.
“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,” said Jonathan Tibus, CEO of Red Lobster.
The company, which had 650 locations before the closures, was partly pushed to the brink by its ill-fated all-you-can-eat shrimp promotion last summer, which caused largest shareholder Thai Union to write-off $530 million in the fourth quarter.
The $20 promotion was eventually raised to $25.
Red Lobster has had five CEOs since 2021 as it struggled to right its declining business.
Thai Union, a publicly held seafood purveyor which bought a 49% stake in the company in 2020, was blamed for the company’s downfall, according to former employees.
The Thailand-based company “forced huge cost reductions, including many that were pennywise and pound foolish because they hurt sales,” a former Red Lobster executive told CNN.
Red Lobster has 36,000 employees and owes them $16.7 million in unpaid wages, according to the filing.
Many employees’ whose stores closed suddenly last week learned about the closures when they showed up for work and were informed by signs posted on the front door.
The company auctioned off furniture and supplies at 52 auctions held last week.
At least one restaurant in Denver brought in $34,601 by selling all of the furniture and most of the kitchen equipment, according to auction site TAGeX, which does not disclose the final bids but posts them online temporarily before the bids close.
