Current:Home > reviewsRed Lobster says it will soon exit bankruptcy protection after judge approves seafood chain’s sale -Wealth Evolution Experts
Red Lobster says it will soon exit bankruptcy protection after judge approves seafood chain’s sale
View
Date:2025-04-18 18:35:43
NEW YORK (AP) — After months of dozens of restaurant closings and headlines about “endless shrimp” woes, Red Lobster is poised to soon exit from Chapter 11 bankruptcy protection.
A U.S. bankruptcy judge on Thursday approved the casual seafood chain’s reorganization plan and sale to a lender group led by asset manager Fortress. The green light arrives under just four months after Red Lobster filed for bankruptcy protection as it pursued a sale, following years of mounting losses and dwindling customers while it struggled to keep up with competitors.
At the time of filing in May, Red Lobster’s leadership shared plans to “simplify the business” through a reduction of locations. The Orlando, Florida, chain shuttered dozens of its North American restaurants in recent months — both leading up to and during the bankruptcy process. That includes more than 50 locations whose equipment was put up for auction just days before the Chapter 11 petition, followed by dozens of additional closures throughout the bankruptcy process.
Red Lobster said Thursday that it expects to operate about 544 locations across the U.S. and Canada upon emerging from bankruptcy. That’s down from 578 disclosed as of May’s filing.
Under terms of the acquisition, which is expected to close at the end of September, the chain will continue to operate as an independent company.
The chain will also get a new CEO — Damola Adamolekun, former chief executive of P.F. Chang’s.
Adamolekun was appointed to head RL Investor Holdings, the newly formed entity acquiring Red Lobster, by Fortress last week. In a statement Thursday, Adamolekun said that Red Lobster “has a tremendous future” and thanked Jonathan Tibus, who will leave the company and step down as CEO, for his leadership during the bankruptcy process.
Red Lobster’s purchaser is also providing additional funding to help the Orlando, Florida-based chain get back on its feet post-emergence. Adamolekun said the company’s long-term investment plan includes a commitment of more than $60 million in new funding.
Red Lobster has seen multiple ownership changes over the course of its 56-year history. The chain was founded back in 1968 by Bill Darden, who sold Red Lobster to General Mills in 1970. General Mills later went on to form Darden Restaurants, which owns Olive Garden and other chains. Darden Restaurants was spun off from General Mills in 1995.
Darden Restaurants later sold Red Lobster to a private equity firm in 2014. Thai Union Group, one of the world’s largest seafood suppliers, first invested in Red Lobster in 2016 and upped its stake in 2020 — but announced its intention to exit its minority investment earlier this year.
When announcing plans to divest in January, CEO Thiraphong Chansiri said the COVID-19 pandemic, industry headwinds and rising operating costs from Red Lobster had resulted in “prolonged negative financial contributions to Thai Union and its shareholders.” It reported a $19 million loss from Red Lobster for the first nine months of 2023.
While not the sole reason, among sources of loss were — yes — those endless shrimp. Last year, Red Lobster significantly expanded the iconic all-you-can-eat special. But customer demand overwhelmed what the chain could afford. Thai Union leadership later noted that the deal’s $20 price tag wasn’t making enough money.
veryGood! (358)
Related
- Meet first time Grammy nominee Charley Crockett
- 2024 Olympics: Jordan Chiles’ Parents Have Heartwarming Reaction to Her Fall off the Balance Beam
- Lilly King barely misses podium in 100 breaststroke, but she's not done at these Olympics
- Earthquake reported near Barstow, California Monday afternoon measuring 4.9
- Israel lets Palestinians go back to northern Gaza for first time in over a year as cease
- The top prosecutor where George Floyd was murdered is facing backlash. But she has vowed to endure
- Erica Ash, 'Mad TV' and 'Survivor's Remorse' star, dies at 46: Reports
- Prosecutor opposes ‘Rust’ armorer’s request for release as she seeks new trial for set shooting
- Military service academies see drop in reported sexual assaults after alarming surge
- BMW, Chrysler, Ford, Maserati among 313K vehicles recalled: Check car recalls here
Ranking
- Former Syrian official arrested in California who oversaw prison charged with torture
- Anthony Edwards cheers on Team USA table tennis after friendly trash talk, 'challenge' at 2024 Paris Olympics
- Steals from Lululemon’s We Made Too Much: $29 Shirts, $59 Sweaters, $69 Leggings & More Unmissable Scores
- Alexander Mountain Fire spreads to nearly 1,000 acres with 0% containment: See map
- Could Bill Belichick, Robert Kraft reunite? Maybe in Pro Football Hall of Fame's 2026 class
- 72-year-old woman, 2 children dead after pontoon boat capsizes on Lake Powell in Arizona
- Senate set to pass bill designed to protect kids from dangerous online content
- William Calley, who led the My Lai massacre that shamed US military in Vietnam, has died
Recommendation
The White House is cracking down on overdraft fees
Phaedra Parks returns to Bravo's 'Real Housewives of Atlanta' after 6-season hiatus
Car plunges hundreds of feet off Devil's Slide along California's Highway 1, killing 3
Paris Olympics highlights: USA adds medals in swimming, gymnastics, fencing
Angelina Jolie nearly fainted making Maria Callas movie: 'My body wasn’t strong enough'
Federal appeals court rules against Missouri’s waiting period for ex-lawmakers to lobby
Voting group asks S. Carolina court to order redraw of US House districts that lean too Republican
'Black Swan murder trial': Former ballerina on trial in estranged husband's Florida killing