Red Lobster has filed for bankruptcy due to mounting debt.
According to the Associated Press, a May 19 court filing said the seafood restaurant chain, known for its never-ending shrimp deals, filed for Chapter 11 voluntary bankruptcy in Florida. Red Lobster has more than 100,000 creditors and estimated assets between $1 billion and $10 billion. dollars, according to the filing.
The outlet added that the company’s estimated liabilities were between $1 billion and $10 billion, noting that the filing came just days after the chain closed dozens of restaurants in more than 20 states.
Red Lobster did not immediately respond to PEOPLE’s request for comment.
Photo of Red Lobster restaurant.
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Red Lobster announces lobster and waffles made with their Cheddar Bay Biscuits
In a statement, the restaurant chain said it will “drive operational improvements, streamline operations through downsizing locations and continue to sell nearly all of its assets as a going concern.”
It said the chain had “entered into a stalking horse purchase agreement pursuant to which Red Lobster will sell its business to an entity formed and controlled by its existing lenders.”
Red Lobster restaurants “will remain open and business as usual during the Chapter 11 process, continuing to be the largest and most beloved seafood restaurant company in the world,” the statement said.
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Jonathan Tibus, who was named the company’s new CEO in March, said of the news: “This restructuring is the best way forward for Red Lobster. It allows us to address several financial and operational challenges and become stronger and refocused on our growth.”
“The support we have received from our lenders and suppliers will help us complete the sale process quickly and efficiently while remaining focused on our employees and guests,” added Tibus.
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A waitress carries a lobster pot and a trio of crab dishes at a Red Lobster restaurant in Yonkers, New York.
Michael Nagle/Bloomberg/Getty
Red Lobster’s new Bloody Mary is topped with a lobster claw and Cheddar Bay biscuit
The news comes after PEOPLE reported that the restaurant chain — which opened its first restaurant in 1968 in Lakeland, Fla. — is considering filing for bankruptcy. Bloomberg first reported this news last month.
The outlet reported that Red Lobster was struggling to make money with its current lease and operating costs, and sought advice from commercial law firm King & Spalding.
According to CNN, the restaurant chain reported an operating loss of $12.5 million in the fourth quarter of 2023, despite raising the price of its endless shrimp promotion from $20 to $25.
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The publisher reported in February that Thai Union Group Plc — Red Lobster’s largest shareholder as of 2020 with a 49% stake — announced its plan to exit the company in January because it was causing “negative financial contributions to Thai Union and its shareholders,” according to Thiraphong Chansiri, CEO of Thai Union Group.
CNN reported that the company cited a $19 million loss from Red Lobster in the first nine months of 2023 due to factors including the Covid-19 pandemic, high interest rates and rising costs. That figure grew to $22 million throughout 2023.
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