(Bloomberg) -- Red Lobster Management won court approval to leave bankruptcy under new ownership led by Fortress Investment Group, giving the iconic seafood chain a chance at revival after filing Chapter 11 about three months ago.
US Bankruptcy Judge Grace Robson said Thursday she’d approve Red Lobster’s restructuring plan and sale of the business to Fortress and other lenders. Red Lobster has closed some poorly performing locations but will leave Chapter 11 with roughly 545 restaurants in the US and Canada and more than 30,000 full- and part-time employees.
Fortress and other lenders acquiring Red Lobster are forgiving company debt and have agreed to provide an additional $70 million equity investment, according to court documents. The restructuring was approved about a week after Red Lobster announced that it had appointed Damola Adamolekun, the former chief executive officer of P.F. Chang’s, to lead the seafood chain out of Chapter 11.
The sale leaves unresolved a dispute with Red Lobster’s former largest owner, Thai Union Group Pcl, over its money-losing “Ultimate Endless Shrimp” promotion. Red Lobster’s advisers have said they’re investigating potential claims against Thai Union, claiming the deal saddled the company with burdensome supply obligations. Thai Union has disputed the allegation.
Red Lobster announced in June that it had struck an agreement with Fortress and a committee of its unsecured creditors on the terms of the restructuring. With the deal and sale to lenders in hand, Red Lobster subsequently sought to speed up its exit from bankruptcy.
The seafood chain filed Chapter 11 in May after struggling with declining sales and rising prices across the casual dining sector which have made consumers more selective about where they dine. Red Lobster was also saddled with costly leases; the company spent about $190.5 million on lease obligations in 2023, according to court documents.
The case is Red Lobster Management LLC, number 24-02486, in the US Bankruptcy Court for the Middle District of Florida.
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