Red Lobster Nears Sale After Bankruptcy Filing

Two months post-bankruptcy, Red Lobster is on the verge of a new ownership arrangement, as the seafood chain has announced its intention to accept a sale offer from Fortress Credit Corp. This decision comes after Red Lobster received no competing bids for acquisition. A court hearing is scheduled for next week to finalize the sale, which is crucial for the chain's future. Fortress Credit Corp., a significant lender to Red Lobster, has played a pivotal role in the chain's operations, providing a $100 million loan that has helped sustain it during bankruptcy proceedings. The investment fund, which owns several restaurant brands including Krystal and Logan’s Roadhouse, is now positioned to take control of Red Lobster, which has recently shuttered around 100 locations and plans to close more of its approximately 600 remaining restaurants. The decline of Red Lobster has been attributed to a combination of mismanagement, increased competition, and inflationary pressures. The chain, once a leader in the restaurant industry, has faced challenges since Thai Union, a global seafood supplier, became its largest shareholder in 2020. Former executives have criticized the leadership under Thai Union, claiming it fostered a toxic culture and led to poor strategic decisions, such as the ill-fated $20 endless shrimp promotion that resulted in an $11 million loss. In its bankruptcy filing, Red Lobster indicated it is investigating the decisions made during Thai Union's tenure, particularly regarding the endless shrimp promotion, which it suspects may have been improperly designed to benefit Thai Union. The seafood supplier has dismissed these allegations as unfounded.