Red Lobster files for bankruptcy but will stay open

Flawed decisions, including a permanent endless shrimp deal, real estate sales and private equity debt, has forced Red Lobster to file for Chapter 11 bankruptcy, with its leaders planning to seek a buyer for the financially troubled Orlando-based seafood chain.

The bankruptcy, filed in U.S. District Court in Orlando, will allow the company to continue operating after restructuring amid nearly $300 million in outstanding debt.

While Red Lobster’s headquarters will probably remain in Central Florida, San Diego-based restaurant analyst John Gordon said whether it stays in downtown Orlando and how its corporate workforce will be affected remains to be seen.

“They will look at that lease,” Gordon said Monday of the three-story space at CNL Center on South Orange Avenue. “I’m not saying there will be additional headquarters staff layoffs, though there certainly could be. But there are hundreds of suburban Orlando office parks where they could just as easy have a corporate headquarters.”

In a news release late Sunday, the company said the plan is to “simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets.”

“This restructuring is the best path forward for Red Lobster,” said CEO Jonathan Tibus in the release. “It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth.”

Tibus also said the company would be sold.

“The support we’ve received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests,” the CEO said.

The filing listed company assets of $1 billion to $10 billion and liabilities of $1 billion to $10 billion.

Red Lobster began as a single restaurant started by Bill Darden in Lakeland, Florida, in 1968 before joining General Mills, which later spun off Orlando-based Darden Restaurants in 1995. Darden then sold Red Lobster to Golden Gate Capital for $2.1 billion in 2014.

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