Thursday, May 23, 2024

Red Lobster closing dozens of locations as bankruptcy possibilities loom

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Seafood restaurant chain Red Lobster is closing dozens of locations nationwide as the company struggles to stay above water.

An announcement released earlier this week indicated the company would be “auctioning off 50+ locations across the country.”

Restaurant liquidation company TageX Brands announced it would be overseeing the sale of equipment at the various closing locations, calling the situation its “largest restaurant equipment auction ever.” Only 48 locations were specifically listed in its catalog.

RED LOBSTER CONSIDERING BANKRUPTCY FILING: REPORT

The exterior of a Red Lobster restaurant is seen in Leesburg, Florida. (Stephen M. Dowell/Orlando Sentinel/Tribune News Service via Getty Images / Getty Images)

Five locations are set to be closed in California alone, with another five in Florida. Colorado and Maryland will both lose four.

The locations are being sold off wholesale by TageX, with the company announcing that “these auctions are WINNER TAKES ALL – meaning, each winner will receive the ENTIRE contents of the Red Lobster location they bid on.”

Earlier this year, it was reported that Red Lobster was considering filing for bankruptcy to relieve financial pressures that have weighed on the company.

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Cheddar Bay Biscuits

Cheddar Bay Biscuits are pictured at a Red Lobster restaurant in Alexandria, Virginia. (Deb Lindsey For The Washington Post via Getty Images / Getty Images)

According to a report by Bloomberg citing people familiar with the discussions, Red Lobster is weighing a Chapter 11 bankruptcy filing to renegotiate burdensome leases and address other long-term contracts as well as rising labor costs.

The outlet reported that the seafood restaurant chain is being advised by law firm King & Spalding on the subject, and that discussions about restructuring are ongoing, and no final decisions have been made about a bankruptcy filing.

By filing for Chapter 11 bankruptcy, the company could continue to operate while it works with creditors and investors to put in place a debt reduction plan that would allow it to head into the future on a better financial footing.

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Red lobster

In an aerial view, a sign is posted on the exterior of a Red Lobster restaurant in Rohnert Park, California. Red Lobster is considering filing for Chapter 11 bankruptcy to address rising labor costs and in hopes of renegotiating property leases and l (Justin Sullivan/Getty Images / Getty Images)

Red Lobster brought in Jonathan Tibus as its new CEO in March. Tibus is considered an expert in developing and implementing restructuring plans at underperforming restaurants, retail and hospitality companies and has led numerous restructuring efforts.

Fox News Digital’s Eric Revell contributed this report.

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