The lawsuit, filed in Florida on behalf of creditors owed about $295 million, alleges Thai Union used the promotion to extract value from the chain
Bloomberg / Getty Images
Red Lobster creditors have filed suit against former controlling shareholder Thai Union Group, alleging the Bangkok-based seafood company used the chain's $20 all-you-can-eat shrimp promotion to funnel money to itself at Red Lobster's expense, according to Bloomberg.
The suit, filed last month in an Orange County, Florida court by a trust representing unsecured creditors owed about $295 million at the time of Red Lobster's 2024 bankruptcy filing, demands a jury trial to determine monetary damages. It also seeks to unwind $32 million in transactions the trust claims Thai Union and related entities compelled Red Lobster to enter into in 2023.
Thai Union, which processes and sells roughly $4 billion in seafood annually under brands including Chicken of the Sea, bought a minority stake in Red Lobster in 2016 before leading a buyout that gave it majority control in 2020. According to the suit, as Red Lobster's financial position worsened, Thai Union shifted its focus toward extracting maximum benefit for itself through contracts the complaint describes as economically irrational for the chain — what the filing calls "uneconomic contracts."
A figure who looms large in the complaint is Paul Kenny — identified by the suit as a restaurant executive with a stake in Thai Union who served as interim CEO from August 2022. Without seeking approval, Kenny in May 2023 converted the shrimp promotion from a temporary offer into a permanent fixture and ordered the chain's marketing team to push it — a move the suit says was made despite protests from Red Lobster staff who had no ties to Thai Union. Kenny did not respond to requests for comment.
The promotion drove customers toward cheaper menu items and away from higher-margin dishes, the suit alleges, while simultaneously giving Thai Union a captive buyer for its shrimp at above-market prices. A 2023 supplier review orchestrated by Kenny resulted in the exclusion of a vendor that had long served Red Lobster, a decision the suit says handed Thai Union exclusive control over sourcing for close to half of the shrimp varieties the chain bought.
Locations across the country ran out of product and ground to a halt, the filing alleges, and rather than pulling back, Kenny kept the promotion running — a decision that eventually saddled the chain with a glut of excess shrimp inventory. Red Lobster's turnaround CEO, Jonathan Tibus, separately alleged in court filings that making the promotion permanent cost the company $11 million.
In September 2023, the chain failed to meet its obligations on a $275 million Fortress Investment Group loan; by May 2024, it had sought Chapter 11 protection. The suit further alleges that when Thai Union exited its ownership position that month, it made no financial contribution to help the company through bankruptcy. After completing its restructuring in September 2024, Red Lobster was acquired by new investors and has since been operating under CEO Damola Adamolekun. Separately, the chain brought back its shrimp promotion in April, though only for a limited run and sourced from vendors other than those involved in the original controversy.
Neither Thai Union nor Red Lobster responded to requests for comment.
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