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Red Lobster Files for Chapter 11, Seeks Buyer
Red Lobster Management LLC said late Sunday evening that it had filed for Chapter 11 protection in the United States Bankruptcy Court for the Middle District of Florida. The move was widely expected; CNBC reported in April that the seafood restaurant operator was seeking a buyer to avoid a bankruptcy filing.
Further store closures and a sale of substantially all its assets are part of the plan outlined in Sunday’s bankruptcy filing. Red Lobster said it had entered into a stalking horse purchase agreement pursuant to which the company will sell its business to an entity formed and controlled by its existing term lenders.
Meanwhile, the company has received a $100-million debtor-in-possession commitment from its lenders and plans to keep all locations open while the bankruptcy case runs its course.
“This restructuring is the best path forward for Red Lobster,” said Jonathan Tibus, a restructuring expert who was recently appointed as CEO. “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.”
CNBC reported that in a court filing, Tibus blamed a “difficult macroeconomic environment, a bloated and underperforming restaurant footprint, failed or ill-advised strategic initiatives, and increased competition within the restaurant industry” for the chain’s need to seek Chapter 11 protection.
The chain was divested by Darden Restaurants in 2014 and sold to private equity firm Golden Gate Capital, which subsequently sold its ownership stake to an investor group.
- ◦Sale/Acquisition
- ◦Financing
