Red Lobster filed for Chapter 11 bankruptcy protection, the company announced May 19.
The Orlando-based company intends to keep operating its restaurants while reducing locations and devising a plan to repay lenders.
It intends to use the proceedings to “drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets as a going concern,” the release said.
As part of these filings, Red Lobster has agreed to sell its business “to an entity formed and controlled by its existing term lenders,” referred to as “a stalking horse agreement.”
Red Lobster has been working with vendors to ensure that operations are unaffected and has received a $100 million financing commitment from its existing lenders.
“This restructuring is the best path forward for Red Lobster,” Jonathan Tibus, the company’s CEO, said in the release.
“It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth.
"The support we’ve received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests.”
The company was founded in 1968. In January, there were 649 Red Lobster restaurants in the United States.
The chain had record profits in 2020. Net income rose 38% in the fourth quarter of that year to record profits of $6.25 billion, according to the U.S. Sun website.
But since January, the Thailand-based Thai Union Group has been trying to sell its 49% interest in the company.
Its fortunes changed when its Ultimate Endless Shrimp promotion, which had been a limited-time special for 20 years, became a permanent menu item last summer.
The restaurant expected a 20% increase in customers. Instead that jumped closer to 40%, Thai Union CEO Thiraphong Chansiri said in November, according to The U.S. Sun.
The decision to offer unlimited shrimp cost the company about $23.5 million over the last half of 202
The Red Lobster chain closed more than 80 restaurants in 27 states May 13.
All three Jacksonville Red Lobster restaurants closed. They are at 416 Commerce Center Drive; 8720 Baymeadows Road; and 13090 City Station Drive.
The Red Lobster at 32 Blanding Blvd. in Orange Park is open, according to the restaurant’s website.
Restaurants were closed in Tampa, Largo, Kissimmee, Leesburg, Orlando, Altamonte Springs, Sanford, Daytona Beach Shores and Gainesville. Georgia stores in Roswell, Athens and Dublin also closed.