The exterior of a Red Lobster restaurant in Austin, Texas, on May 20, 2024.
Brandon Bell | Getty Images
A bankruptcy court has approved Red Lobster's plan to emerge from Chapter 11, putting the seafood chain one step closer to exiting bankruptcy.
The company, known for its seafood and cheddar cheese biscuits, filed for bankruptcy in May. Red Lobster had been struggling with increased competition, high rents, last year's disastrous shrimp promotion and a broader slump in consumer spending.
As part of the restructuring plan, a group of investors under the name RL Investor Holdings will acquire Red Lobster later this month. Once the acquisition closes, former PF Chang CEO Damola Adamolekun will take over at the helm of Red Lobster. Current CEO Jonathan Tibus, who led the company through bankruptcy, will leave Red Lobster.
“This is a great day for Red Lobster,” Adamolekun said in a statement. “With our new sponsors, we have a comprehensive, long-term investment plan, including a commitment of more than $60 million in new funding, that will help revitalize the iconic brand while preserving the best of its history.”
RL Investor Holdings includes TCW Private Credit, Blue Torch and funds managed by affiliates of Fortress Investment Group. Red Lobster will operate as a standalone company.
After reducing its restaurant portfolio, the chain now operates 544 restaurants in the United States and Canada.
At least nine other restaurant chains have filed for bankruptcy this year. High interest rates and reduced consumer spending have taken a toll on food service establishments, particularly if they were already struggling to recover from the Covid-19 pandemic.
