Current:Home > StocksNew owner nears purchase of Red Lobster after chain announced bankruptcy and closures -Streamline Finance
New owner nears purchase of Red Lobster after chain announced bankruptcy and closures
View
Date:2025-04-13 16:54:27
Two months after filing for Chapter 11 bankruptcy, Red Lobster could soon be changing hands.
A stalking horse bidder listed as RL Purchaser LLC − a newly formed entity organized and controlled by Fortress Credit Corporation − is set to be the chain's new owner, according to court documents filed Monday in the Middle District of Florida in Orlando.
RL Purchaser LLC, which consists of Red Lobster's lenders, bid $376 million to acquire the company's remaining assets, according to the Orlando Business Journal.
Red Lobster filed for bankruptcy on May 19 after closing dozens of locations and announcing that it intended to "drive operational improvements" by simplifying the business. Documents later filed in federal court revealed that the bankruptcy was primarily due to significant debt, a carousel of CEOs, an all-you-can-eat shrimp fiasco and a 30% drop in guests since 2019.
Red Lobster would mark Fortress' latest acquisition of a company in bankruptcy, following purchases of Vice Media and Alamo Drafthouse, which was later sold to Sony Pictures Entertainment, Reuters reported.
USA TODAY contacted Red Lobster and its attorneys on Tuesday for comment but have not received a response. Fortress declined to comment on Tuesday.
No bidders made play to buy Red Lobster following Chapter 11 bankruptcy filing
The popular seafood restaurant chain was initially going to be sold more traditionally, but no bidders came forward before the company's July 18 deadline, so the auction was canceled and the stalking horse bidder won by default, the Orlando Business Journal reported. Red Lobster's lack of bidders may have been apparent because the company indicated it would be going away from a traditional asset sale during a July 10 hearing.
“So, the idea is to … maintain operational continuity and potentially reduce the costs and complexities associated with a traditional asset sale,” attorney Jeffrey Dutson of King & Spalding LLP, representing Red Lobster and appearing via Zoom during the hearing, per the Orlando Business Journal.
The auction was scheduled for July 23, but with it being canceled, RL Purchaser LLC is now the "successful bidder." A hearing is scheduled for July 29 for the approval of the sale of the assets, the federal court documents say.
What is a stalking horse bidder?
A stalking horse bidder is "an initial bid on the assets of a bankrupt company," according to Investopedia.
The bankrupt company, which in this case is Red Lobster, chooses an entity from a pool of bidders who will make the first bid on the firm’s remaining assets, the financial media website said. The stalking horse sets the low-end bidding bar so that other bidders cannot underbid the purchase price.
What does the sale mean for Red Lobster?
The sale of Red Lobster means the company should have more flexibility to reorganize. The chain will look to make its marketing and supply chain management more efficient and enhance customer experience and operational effectiveness, Red Lobster CEO Jonathan Tibus said in a 124-page bankruptcy document.
Tibus detailed a "three-prong strategic priority plan," which includes making sure Red Lobster is a "great place to work" by focusing on employee culture and retention, continuing to provide "consistent experiences and excellent customer service," and reducing the company's cost structure without compromising quality.
After closing and vacating dozens of stores, Red Lobster is continuing to identify and eliminate nonproductive spending across all departments, Tibus said. The chain tried relocating the employees of the "financially burdensome" stores to nearby locations and adjusting midlevel management, according to the CEO.
Following the sale, it is unclear if Tibus' plan will come to fruition or if he will even serve as CEO going forward.
Contributing: Reuters
veryGood! (9)
Related
- The White House is cracking down on overdraft fees
- Russian President Putin and Chinese leader Xi meet in Beijing and call for close policy coordination
- After Israel's expected Gaza invasion, David Petraeus says there needs to be a vision for what happens next
- Stretch of I-25 to remain closed for days as debris from train derailment is cleared
- House passes bill to add 66 new federal judgeships, but prospects murky after Biden veto threat
- West Virginia pathologists perform twice as many autopsies as industry standard amid shortages
- After Israel's expected Gaza invasion, David Petraeus says there needs to be a vision for what happens next
- Bryce Harper has quite the birthday party in Phillies' historic playoff power show
- Travis Hunter, the 2
- How does the U.S. retirement system stack up against other countries? Just above average.
Ranking
- Residents worried after ceiling cracks appear following reroofing works at Jalan Tenaga HDB blocks
- Inflation in UK unchanged at 6.7% in September, still way more than Bank of England’s target of 2%
- Britney Spears Says She Was Pregnant With Justin Timberlake's Baby Before They Decided to Get Abortion
- California family behind $600 million, nationwide catalytic converter theft ring pleads guilty
- NCAA hands former Michigan coach Jim Harbaugh a 4-year show cause order for recruiting violations
- Ex-Oregon prison nurse convicted of sexually assaulting women in custody gets 30 years
- Nikki Haley nabs fundraiser from GOP donor who previously supported DeSantis: Sources
- 3 French airports forced to evacuate after security alerts in the latest of a series of threats
Recommendation
New Zealand official reverses visa refusal for US conservative influencer Candace Owens
Former Wisconsin Senate clerk resigned amid sexual misconduct investigation, report shows
Britney Spears writes of abortion while dating Justin Timberlake in excerpts from upcoming memoir
Well-known leader of a civilian ‘self-defense’ group has been slain in southern Mexico
Sonya Massey's father decries possible release of former deputy charged with her death
Love Is Blind’s Izzy Zapata Debuts New Girlfriend After Stacy Snyder Breakup
Malaysia says landslide that killed 31 people last year was caused by heavy rain, not human activity
Former AP videojournalist Yaniv Zohar killed in Hamas attack at home with his family