Seafood chain Red Lobster could be preparing to file for bankruptcy soon. Bloomberg, citing unnamed sources with knowledge of the situation, reports that the dining chain is considering filing for Chapter 11 bankruptcy protection to restructure some of its debt.
The company plans do away with some underperforming leases and address other long-term contracts as well as rising labor costs, the anonymous individuals told the publication, adding that restructuring plans are ongoing and plans of the private negotiation have not yet been finalized.
If Red Lobster files for bankruptcy, it will continue to operate normally during the proceedings, as it discusses with creditors about a possible debt reduction plan, the publication said.
Red Lobster, which operates over 700 restaurants globally, has struggled to get past its “Zombie brand” persona. In March 2024, the company hired Jonathan Tibus to be its new chief executive officer. Tibus, who was previously the CEO of Kona Grill, has decades of company improvement plan experience.
In the meantime, the Orlando, Florida-based chain is receiving guidance from law firm King & Spalding. Red Lobster and King & Spalding did not respond to requests for comment.
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