Red Lobster gets court approval for sale to Fortress Reuters

By Dietrich Knauth

NEW YORK (Reuters) – Restaurant chain Red Lobster received court approval on Thursday for a restructuring that will allow the company to emerge from bankruptcy under the ownership of a coalition of creditors led by Fortress Investment Group.

Red Lobster said the restructuring will allow it to keep all 544 current locations open and keep the jobs of 30,000 employees.

The Orlando, Florida-based company, which operates in 44 US states and four Canadian provinces, closed 93 locations before filing for bankruptcy.

Incoming Red Lobster CEO Damola Adamolekun said the company’s new owners have committed more than $60 million in additional funding to “reinvigorate the iconic brand.”

“This is a great day for Red Lobster,” Adamolekun said in a statement.

Red Lobster filed for bankruptcy in May, trying to resolve its $300 million debt and find a buyer. When no outside bidder emerged, the company chose to move forward with a deal that would hand over control to its creditors in a debt-cancellation deal.

Red Lobster posted a net loss of $76 million in 2023 and blamed its bankruptcy on high inflation, unsustainable rent costs and poor management decisions, including an “endless shrimp” promotion that caused losses of 11 million dollars.