Red Lobster Management, along with its subsidiary Red Lobster, an American casual dining chain, has secured court approval for its Chapter 11 re-organisation plan.
The step will allow for the acquisition of the Red Lobster chain by RL Investor Holdings, an entity formed by funds managed by affiliates of Fortress Investment Group and co-investors TCW Private Credit and Blue Torch.
The acquisition is expected to conclude before the end of September 2024.
Damola Adamolekun will assume the role of CEO of the Red Lobster restaurant chain while Jonathan Tibus, who has led the company through its re-organisation, will resign and depart.
Adamolekun said: “This is a great day for Red Lobster. With our new backers, we have a comprehensive and long-term investment plan – including a commitment of more than $60m in new funding – that will help to re-invigorate 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."
With 544 locations across 44 US states and four Canadian provinces, Red Lobster will maintain its independence post-acquisition with the chain preserving jobs for 30,000 employees, Reuters has reported.
Headquartered in Florida, US, Red Lobster closed 93 locations before filing for bankruptcy.
In May 2024, the chain declared bankruptcy to tackle its $300m debt and look for a buyer. With no external bidders coming forward, the company decided to proceed with a plan that would transfer control to its lenders through a debt-forgiveness agreement.
In the same month, the Canadian counterpart of US seafood chain Red Lobster requested the Ontario Superior Court of Justice to enforce the US Chapter 11 bankruptcy proceedings in Canada.
The Ontario judge subsequently upheld the US bankruptcy proceedings in Canada.
Red Lobster reported a net loss of $76m in 2023 and attributed its bankruptcy to high inflation, excessive rent costs and mismanagement, including an “endless shrimp” promotion that resulted in $11m losses.
