Red Lobster will almost certainly be bought out of bankruptcy by its creditors, led by Fortress Credit Corp., according to a document filed with a bankruptcy court on Monday.
That was the casual-dining chain’s intention when it filed for Chapter 11 bankruptcy protection in May, after years of troubled sales and a reportedly botched all-you-can-eat shrimp promotion that cost it millions of dollars.
The purchaser’s official name is RL Purchaser LLC and it is controlled by Fortress, which refinanced Red Lobster’s debt in January, making it its largest creditor. It will gain control of the company in exchange for the debt it’s owed in a deal reportedly valued at around $375 million.
Fortress Investment Group, parent of Fortress Credit Corp., is also the owner of SPB Hospitality, which owns Krystal, Logan’s Roadhouse, J. Alexander’s, Gordon Biersch Brewery Restaurant, and several other restaurant brands.
In the document filled with the Orlando division of the bankruptcy court of the Middle District of Florida, Red Lobster and affiliated entities that filed for bankruptcy protection did not receive any purchase bids by the July 18 deadline except for RL Purchaser, so it canceled a proposed auction.
A hearing to approve the sale is scheduled for July 29 at 1:30 p.m. at the George C. Young Federal Courthouse in Orlando.
The sale would end a saga of multiple leadership changes and poor performance since Golden Gate Capital sold Red Lobster to a consortium led by seafood supplier Thai Union as well as the chain’s management at the time.
Then-CEO Kim Lopdrup retired less than a year later and was followed in quick succession by Kelli Valade, Paul Kenny, previous legal counsel Horace Dawson, and finally restructuring expert Jonathan Tibus, who prepared the chain for bankruptcy.
In statements that were part of the bankruptcy filing, Tibus pointed to irregularities in the way that Thai Union and people associated with it, including Kenny, handled the “Ultimate Endless Shrimp” promotion as well as Red Lobster’s overall shrimp supply chain.
In the aftermath of the bankruptcy, Red Lobster has closed more than 100 restaurants.
Contact Bret Thorn at [email protected]
