USA – Casual dining, seafood chain Red Lobster has egressed Chapter 11 bankruptcy protection after successfully being acquired by RL Investor Holdings.
The seafood chain announced on September 17 that the successful acquisition had facilitated its transition to an independent, privately held entity.
The acquisition means the chain will continue operating its 545 restaurants in the US and Canada, albeit with new management.
RL Investor Holdings is an investment firm created by funds from affiliates of Fortress Investment Group alongside Blue Torch and TCW Private Credit.
In May, the seafood chain revealed intentions of shutting down at least 48 of its locations in the US following financial challenges.
The financial challenges stemmed from rising cost pressures due to inflation, which significantly increased the cost of raw materials and key ingredients.
According to Red Lobster, the financial challenges were exacerbated by its ‘unlimited endless shrimp’ deal, that offered customers unlimited shrimps for US$20. The value deal resulted in US$11million in operating losses after it attracted too many customers after it became a permanent menu feature.
In 2023, Red Lobster reported a US$76 million net loss.
The seafood chain declared bankruptcy to tackle its US$300 million debt and look for a buyer. Red Lobster reported no external bidders came forward, which led the chain to proceed with a plan that would transfer control to its lenders through a debt-forgiveness agreement.
TAGeX Brands, a restaurant liquidation company, organized an online auction for Red Lobster’s assets, including kitchen equipment and furnishings.
In September, Red Lobster successfully secured court approval for its Chapter 11 restructuring plan.
The approval allowed the seafood chain’s acquisition by RL Investor Holdings. The acquisition was originally intended to be complete by the end of September.
Damola Adamolekun was appointed the new CEO following the successful acquisition.
Adamolekun welcomed his appointment and the acquisition by saying, “Our comprehensive and long-term investment plan for Red Lobster includes a commitment of more than US$60 million in new funding which will help us to deliver improvements across every aspect of our company.”
“I’m looking forward to working with our 30,000-strong team to bring our plan to life.”
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