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Following the closure of over 100 stores last week, the seafood business Red Lobster, which lost millions of dollars on its all-you-can-eat shrimp offer last year, has formally filed for bankruptcy.

Red Lobster said in a statement that it has voluntarily filed for Chapter 11 in Florida. It still plans to maintain its sites, though.

The business reported receiving a funding commitment of $100 million to support continuing operations.

The seafood chain said that it will “pursue a sale of essentially all of its assets as a continuing concern, drive operational efficiencies, and streamline the business through a decrease in locations.”

The news follows a $76 million loss for the business in 2018 and a 30% decline in visitors since 2019.

In a court filing on Sunday, Red Lobster disclosed that its assets and liabilities ranged from $1 billion to $10 billion.

Thanks to the bankruptcy, Red Lobster will be able to postpone landlord evictions and other vendor debts that it has not paid in recent months.

“This restructure is Red Lobster’s best course of action going forward.” Red Lobster CEO Jonathan Tibus stated, “It enables us to overcome several financial and operational obstacles and come out stronger and refocused on our goals.”

The main stakeholder in the U.S. seafood chain, Thai Union, had to write off $530 million in the fourth quarter of last year due to the firm’s all-you-can-eat shrimp offer, which ultimately led to its liquidation. The chain initially had 650 locations.

The $20 promotion ultimately increased to $25.

Red Lobster has also gone through five CEOs since 2021 as a result of its recent struggles to stem the company’s declining revenue.

“A former Red Lobster executive told CNN that the Thailand-based firm imposed massive cost reductions, including those that were pennywise and pound stupid because they damaged sales.”

Additionally, according to the complaint, Red Lobster owes its 36,000 workers $16.7 million in outstanding pay.

Established in 1968, the corporation boasted around 700 sites as of 2019. Sales fell by 13% between 2019 and 2023, indicating that it was unable to recover its popularity following the epidemic.

Author: Scott Dowdy

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