Red Lobster has canceled auctions for the sale of restaurant equipment after its creditors put together a successful bid that allows them equity in the newly reorganized company. (Patch file photo),
ACROSS AMERICA — Bankrupt Red Lobster, which lost millions of dollars in its endless shrimp fiasco, is getting a second chance after its creditors made a $376 million bid to buy the Orlando, Florida-based seafood chain’s remaining assets.
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As part of the deal, filed earlier this month in a Florida bankruptcy court, the chain has canceled scheduled auctions of restaurant equipment. The successful bidder is the newly formed RL Purchasers LLC, which is backed by Red Lobster’s creditor, Fortress Investment Group.
Red Lobster currently operates bout 547 locations across the United States, with 97 locations temporarily closed.
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Red Lobster, which filed for bankruptcy in May and abruptly closed dozens of restaurants, had until July 18 to work out a deal or turn over its restaurant’s keys to Fortress.
Fortress originally planned to sell the chain’s assets under a more traditional deal, but when no bidder stepped forward, the stalking horse bid was accepted by default. Rather than buying the assets outright, Red Lobster’s creditors will receive equity in the reorganized company, The Wall Street Journal reported.
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The new plan was revealed in a July 10 hearing, where Judge Grace Robson seemed to support it.
“It sounds to me like it makes business sense, and sense for the case, but … I would have to see the documents,” Robinson said during the hearing, which was held via Zoom. “I’m not going to pre-approve it, but I’m OK so far with the concept.”
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A court hearing to approve the sale is scheduled for Monday.
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