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Red Lobster emerges from bankruptcy and will operate as an independent company

According to court documents, the company's bankruptcy was due to significant debt, a carousel of CEOs, a debacle in its all-you-can-eat shrimp offering and a 30% drop in guests since 2019.

Red Lobster is exiting Chapter 11 bankruptcy proceedings after a federal judge on Thursday approved the seafood restaurant chain's plan to recover from an “Endless Shrimps” fiasco, enormous debt, dozens of location closures and an overall decline in customer traffic.

As part of Red Lobster's Chapter 11 bankruptcy plan, RL Investor Holdings LLC – a newly formed company organized and controlled by Fortress Investment Group LLC – will acquire the restaurant chain. The acquisition is expected to be completed by the end of the month, Red Lobster said in a press release.

Red Lobster is the latest acquisition by Fortress, a company that filed for bankruptcy after purchasing Vice Media and Alamo Drafthouse, which has since been sold to Sony Pictures Entertainment.

Fortress also controls a company called SPB Hospitality, which owns brands such as Logan's Roadhouse, Krystal, Old Chicago Pizza & Taproom and Twisted Tenders, spokesman Gordon Runté said.

“This is definitely an area where we have a lot of experience,” Runté told USA TODAY about taking over another struggling restaurant. “Red Lobster is a big undertaking, it has over 500 locations, but we are excited about the prospects for the restaurant.”

“This is a great day for Red Lobster”

Upon completion of the acquisition, Damola Adamolekun will become CEO of the Red Lobster restaurant chain, replacing current CEO Jonathan Tibus, who is stepping down from his position and leaving the company. Adamolekun was previously CEO of PF Chang's.

“This is a big day for Red Lobster,” said Adamolekun. “With our new backers, we have a comprehensive and long-term investment plan – including a commitment of more than $60 million in new funding – that will help revitalize the iconic brand while preserving the best of its history.”

“Red Lobster has a great future and I can’t wait to put our plan into action with the company’s more than 30,000 team members in the U.S. and Canada,” he said.

Following court approval, Red Lobster will continue to operate as an independent company and maintain 544 locations in 44 U.S. states and four Canadian provinces, the company said.

“I am proud of what Red Lobster has accomplished during this restructuring. The company will emerge from bankruptcy stronger financially and operationally, with new investors committed to investing and growing,” Jonathan Tibus said in the press release.

Red Lobster closed 23 locations last week

Red Lobster recently closed 23 more restaurants nationwide.

The latest restaurant closures bring the total number of closures in the U.S. to at least 129. The latest wave affected three locations in Florida, Illinois and Virginia, two in Minnesota and New York, and one each in the following states: Arizona, California, Colorado, Georgia, Indiana, Missouri, North Carolina, Ohio and South Carolina.

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Red Lobster in trouble: 23 more closures

It looks like Red Lobster is in trouble, as the company will close another 23 stores by September, bringing the total number of closures this year to over 120.

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Why did Red Lobster file for Chapter 11 bankruptcy?

Red Lobster filed for bankruptcy on May 19 after the chain closed dozens of locations and announced it would “drive operational improvements” by simplifying the business. Documents later filed in the Middle District of Florida showed the bankruptcy was due to significant debt, a carousel of CEOs, an all-you-can-eat shrimp debacle and a 30% drop in guests since 2019.

“Recently, the debtors have faced a number of financial and operational challenges, including a difficult macroeconomic environment, a bloated and underperforming restaurant chain, failed or ill-advised strategic initiatives and increased competition within the restaurant industry,” Tibus said in the bankruptcy documents.

Tibus, who served as Red Lobster's chief revenue officer on Jan. 11 before being named CEO, said in the documents, “It was immediately apparent that Red Lobster's performance was deteriorating and had been for several years.”

Contributors: Natalie Neysa Alund and Gabe Hauari/ USA TODAY

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