Red Lobster’s petition for Chapter 11 bankruptcy protection has been approved, paving the way for its sale to creditors, led by Fortress Investment Group.
The new proposed owner is RL Investor Holdings LLC. It was created by funds managed by affiliates of Fortress as well as TCW Private Credit and Blue Torch Capital.
Fortress also owns SPB Hospitality, which owns Krystal, Logan’s Roadhouse, J. Alexander’s, Gordon Biersch Brewery Restaurant, and several other restaurant brands.
TCW and Blue Torch are both private credit firms that focus on middle-market companies.
The plan is essentially what Red Lobster requested when it filed for bankruptcy protection in May.
On completion of the sale, which is expected to happen by the end of September, Damola Adamolekun will replace Jonathan Tibus as the casual-dining seafood chain’s CEO.
Tibus, a restructuring expert, was hired as CEO shortly before the bankruptcy filing.
"This is a great day for Red Lobster," Adamolekun said in a statement. "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. Red Lobster has a tremendous future, and I cannot wait to get started on our plan with the company's more than 30,000 team members across the USA and Canada. I want to thank Jonathan Tibus and his team for their stewardship, and look forward to welcoming them as frequent Red Lobster guests."
Red Lobster is emerging from bankruptcy as a significantly smaller company, having closed about 16% of its restaurants in the run up and aftermath of the bankruptcy filing. According to Technomic Ignite data, the chain had 649 restaurants in 2023. Red Lobster said it now operates 544 restaurants in 44 U.S. states and four Canadian provinces.
In the original bankruptcy filing, Tibus indicated that Red Lobster’s previous majority shareholder, seafood supplier Thai Union, hindered the chain’s financial success by pushing a loss-leading Ultimate Endless Shrimp promotion while also removing other shrimp suppliers from the company’s supply chain.
"I'm proud of what Red Lobster has achieved during this restructuring – the company will emerge from Chapter 11 stronger financially and operationally, and with new backers who are resolutely focused on investment and growth,” Tibus said in the release announcing Red Lobster’s emergence from bankruptcy. “I'm incredibly grateful for the support we've received from our team members and diners, and from so many of our landlords and vendors throughout this process. I'm looking forward to cheering on Red Lobster as an ardent fan in the years ahead."
The chain did, indeed, receive an outpouring of support after declaring bankruptcy, as the hashtag #savethebiscuits trended on social media, referring to Red Lobster’s beloved Cheddar Bay Biscuits.
Rapper Flavor Flav, who expressed support for the chain on social media and reportedly ordered the entire menu during one visit, also was a spokesman for the chain’s Crabfest in June.
Contact Bret Thorn at [email protected]
