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, an all-you-can-eat shrimp fiasco and a 30% drop in guests since 2019.
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.
