Samantha NeelyUSA TODAY NETWORK - Florida
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The cheddar bay biscuits might be here to stay.
Florida-based seafood chain Red Lobster could finally be getting a new owner, with court documents detailing RL Purchaser LLC proposing a $376 million bid to acquire its remaining assets.
A stalking horse bidder listed the newly formed entity to be the chain's new owner, according to documents filed Monday in the Middle District of Florida in Orlando. RL Purchaser LLC is organized and controlled by Fortress Credit Corporation, which Reuters reported has been acquiring other bankrupt companies recently, such as Alamo Drafthouse and Vice Media.
Why did Red Lobster file for bankruptcy?
The company filed for Chapter 11 bankruptcy back on May 19 of this year. By filing for Chapter 11 bankruptcy, the company would stay open while it reorganized funds to pay off existing debt over time, seeking to continue with better financial footing.
In a company statement in May, a representative said Red Lobster "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. As part of these filings, Red Lobster has entered into a stalking horse purchase agreement pursuant to which Red Lobster will sell its business to an entity formed and controlled by its existing term lenders."
USA Today reported that documents filed in federal court later revealed that the bankruptcy was primarily due to significant debt, a carousel of CEOs, anall-you-can-eat shrimp fiascoand a 30% drop in guests since 2019.
Red Lobster abruptly closed nearly 100 locationsaroundthe country in May, includingat least 17 in Florida,
Who is Red Lobster's new owner?
Fortress Investment Group, parent of Fortress Credit Corp., is an investment management firm based in New York City.
According to Nation Restaurant News, they are also the owner of SPB Hospitality, which owns Krystal, Logan’s Roadhouse, J. Alexander’s, Gordon Biersch Brewery Restaurant, and several other restaurant brands.
How did RL Purchaser, Fortress Investment Group acquire Red Lobster?
The popular seafood restaurant chain was initially going to be sold more traditionally, but they did not receive any purchase bids by the July 18 deadline except for RL Purchaser so the auction was canceled and the stalking horse bidder won by default, the Orlando Business Journal reported.
A stalking horse bidder is "an initial bid on the assets of a bankrupt company," according toInvestopedia.
“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.
Who founded Red Lobster? Seafood restaurant chain started in Florida
Red Lobster was founded in 1968 in Lakeland, Florida, by Bill Darden and Charley Woodsby.
General Mills acquired the company in 1970 and helped it expand into North America, before establishing a new company for its restaurant brands called Darden Restaurants Inc. in 1995. Darden also owned the Italian restaurant chain, Olive Garden.
Almost 20 years later, Darden Restaurants sold Red Lobster to Golden Gate Capital in 2014. Thai Union, which previously had a one-fourth stake in the company, bought out Golden Gate's stake in the company in 2020.
This year, Thai Union Group revealed that it intended to exit its minority investment in Red Lobster.
"The combination of COVID-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders," Thiraphong Chansiri, Thai Union Group’s CEO, said in a news release.
Red Lobster brought in Jonathan Tibus as itsnew CEOrecently, according to Fox Business.
How manyRed Lobster restaurants in Florida closed this year?
At the time of the announcement, Red Lobster pushed back against any discussion of restaurant closings, saying that itsremaining stores would stay openduring its bankruptcy proceedings. As of July 2024, the restaurant has closed roughly 100 locations across the country.
After announcing its bankruptcy, the company closed the most locations in Florida at 17. A search of the Red Lobster website had locations in these Florida cities listed as “Closed” under its hours for all days of the week:
- Altamonte Springs:340 West SR 436
- Daytona Beach Shores:3162 S Atlantic Ave.
- Gainesville:6910 W. Newberry Road
- Hialeah:1750 W 49th Street
- Jacksonville:416 Commerce Center Drive
- Jacksonville:8720 Baymeadows Road
- Jacksonville:13090 City Station Drive
- Jensen Beach:3544 NW Federal Hwy
- Kissimmee:4010 West Vine Street
- Largo:10500 E Ulmerton Road
- Leesburg:10010 US Highway 441
- Orlando:3552 E. Colonial Drive
- Orlando:7373 W Colonial Drive
- Orlando:8003 Golden Sky Lane
- Sanford:20 Towne Center Circle
- Tampa:2625 East Busch Blvd.
- Tampa:17021 Palm Pointe Drive
As of July 24, 2024, many restaurant locations in Florida still appear open onRed Lobster's website.
Contributing: Jonathan Limehouse, USA TODAY; C. A. Bridges, USA TODAY NETWORK - Florida
