In This Story
Red Lobster may finally be clawing its way out of bankruptcy after a judge approved the seafood chain’s reorganization plan.
Under the plan, RL Investor Holdings LLC, a newly formed entity backed by Fortress Investment Group LLC, will acquire Red Lobster by the end of September. The deal also involves co-investors TCW Private Credit and Blue Torch.
Once the acquisition is completed, former P.F. Chang’s CEO Damola Adamolekun will take over as the new boss of the seafood chain. Current CEO Jonathan Tibus, who led Red Lobster through the restructuring process, will step down.
“This is a great day for Red Lobster,” Adamolekun said. “With our new backers, we have 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.”
In May, the iconic chain filed for Chapter 11 bankruptcy protection to clear financial obstacles linked to a series of failed lease-back agreements. There was also the costly $20 “endless shrimp” deal, which hurt earnings. (For those wondering, the deal is still available, but only on Mondays).
During that same month, amid growing bankruptcy concerns, Red Lobster said it would close 50 locations. To make matters worse, the chain’s liquidator, TAGeX Brands, began auctioning off equipment from the closed sites.
Now, with a new strategy and a new CEO in place, Red Lobster is poised for a comeback attempt. The chain will operate 544 locations across 44 U.S. states and Canada, down from the 578 locations it had at the time of the filing.
“Red Lobster has a tremendous future,” Adamolekun said.
The sentiment is echoed by some experts. In late July, Daniel Gielchinsky, founder of DGIM Law and an expert in corporate bankruptcies, shared a similar outlook.
“The company has a lot of goodwill and brand equity,” Gielchinsky told Quartz. “The market has been cheering for Red Lobster to emerge as a healthier business.”