Red Lobster Sale Looms After Court Approves Bankruptcy Protection Plan

It's been an eventful year in a series of eventful years for everyone, including Red Lobster. In May, Red Lobster filed for Chapter 11 bankruptcy following the abrupt closure of at least 48 restaurants across the country. The fans were as shocked as many Red Lobster employees, hundreds of whom were suddenly left jobless. Shortly thereafter, parent company Thai Union Group revealed that the chain had lost a whopping $22 million in 2023 alone and announced plans to sell its 49% share of the company. Now, in this grim saga's latest and quasi-hopeful update, a bankruptcy court has just approved Red Lobster's request for Chapter 11 protection.

The decision to file for Chapter 11 bankruptcy protection was not unanimously supported. Red Lobster's creditors expressed major backlash toward the plan, as it would absolve the restaurant from repaying its mass of debt (a figure estimated around $300 million), leaving some creditors stuck with six-figure loans that, now, legally would not have to be repaid by Red Lobster. Following the terms outlined by Chapter 11, the debts would be transferred to whatever firm decides to purchase Red Lobster next. Now, this sale is officially underway as the company changes hands to RL Investor Holdings LLC., which has already named Damola Adamolekun as CEO when the sale finalizes at the end of September, reports Nation's Restaurant News.

RL Investor Holdings is a joint creation of Blue Torch Capital, TCW Private Credit, and members of Fortress Investment Group, the latter of which also encompasses SPB Hospitality, which owns Logan's Roadhouse, J. Alexander's, and Gordon Biersch Brewery Restaurant, among other ventures. A middle-market company like Red Lobster could be a natural expansion for the firm, espcially as the Red Lobster brand itself looks to rebuild and expand. Over the past few years, Red Lobster has shuttered roughly 16% of its total restaurant presence, now holding 544 restaurants compared to 649 in 2023.

Following the sale's completion, former CEO Jonathan Tibus will leave the Red Lobster team. As Tibus shared in an official press release announcing the sale on September 5, "I'm proud of what Red Lobster has achieved during this restructuring — the Company will emerge from Chapter 11 stronger financially and operationally, and with new backers who are resolutely focused on investment and growth ... I'm looking forward to cheering on Red Lobster as an ardent fan in the years ahead." New CEO Adamolekun expressed similar optimism in the statement, elaborating on the company's strategies for a dramatic turnaround with "a comprehensive and long-term investment plan — including a commitment of more than $60 million in new funding — that will help to reinvigorate the iconic brand while keeping the best of its history."