Red Lobster filed for Chapter 11 bankruptcy Sunday, announcing it will close a significant number of its restaurants and sell equipment in an attempt to raise funds.
The announcement comes a week after the company closed 48 of its locations, citing an economic downturn sparked by the COVID pandemic. The chain has reportedly been considering bankruptcy for more than a month, now relying on the financial fallback to recover what is left of the country’s largest seafood chain.
The remaining restaurants plan to stay open during the bankruptcy process, which includes the company being sold back to its 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,” CEO Jonathan Tibus said in a statement. “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.”
The company faces between $1 billion and $10 billion in liabilities and more than 100,000 debtors, according to a bankruptcy court filing. It also has between $1 billion and $10 billion in total assets.
Red Lobster has struggled for years, seeking to restructure its debt earlier this year and suffering the departure of its largest investor, a Thai seafood supplier.
Recent attempts to bolster business, including an all-you-can-eat shrimp deal last year, backfired, costing 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 went on to form Darden Restaurants, which owns Olive Garden and other chains, and spun the company off in 1995.